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Colin Hill | 05 Dec 2017 | Advice, First Homes

Selling a Property? What are the Agent and Vendor Obligations?

Colin Hill | 05 Dec 2017 | Advice, First Homes

Selling a Property? What are the Agent and Vendor Obligations?

Selling a Property? What are the Agent and Vendor Obligations?

Buying a house is an exciting time, but through all the sunshine and rainbows, there is a huge financial commitment that is extremely difficult to back out of once the offer becomes unconditional – even if the small crack in the kitchen ceiling is now a direct entrance to the bedroom.

Unlike most purchases, home buyers are not protected by the Consumer Guarantees Act which allows the consumer to seek repairs, replacements or refunds when goods are faulty. Asking for a refund on your leaking house, isn’t so easy. As a buyer, you are protected under the legal obligations of the vendor and real estate, but it is essential that you carry out your own thorough due diligence with the help of a good lawyer.

What are the vendor obligations?

When listing a house, the vendor must disclose all known defects in the listing agreement. This will include weathertightness, proneness to flooding, or unconsented works. If the vendor withholds any known defects from the agent and potential buyer, they may be held liable for misleading or deceptive conduct. As to whether they knew about the defects could be difficult to prove, particularly in a private sale.

Real Estate Agents Act

A real estate agent will be acting with the best interest of the vendor, but they have legal obligations under the Real Estate Agents Act and the Code of Conduct:

Rule 6.4 provides:

A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client.

Rule 10.7 provides:

A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Where it would appear likely to a reasonably competent licensee that land may be subject to hidden or underlying defects, a licensee must either—

(a) obtain confirmation from the client, supported by evidence or expert advice, that the land in question is not subject to defect; or

(b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.

So, the real estate is not only obliged to disclose any known issues, but potential issues based on their previous experience with similar land types or properties. For example, if a structure and age of a property is prone to leaking, the agent must pass this information onto the client and failure to do so will be in breach of their Code of Conduct. If a real estate agent fails to comply with their obligations they may face a subsequent fine, or even lose their license.

As I mentioned, proving that the vendor or agent were aware of any defects could be challenging, if they were even aware of them to begin with. Never purchase a house without carrying out thorough due diligence including a LIM report and building inspection on the property.

If you would like more great advice to minimise risk when making your big purchase, give me a call and I’ll be with you throughout your journey. I will even find you the best rates on your mortgage.

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