What Must Be Disclosed When Selling a House in NSW?

Selling your home is not simply a matter of listing the home and waiting for offers. A vendor (seller) has legal disclosure obligations, and the real estate agent also has separate obligations not to mislead purchasers (buyers) or withhold material facts.

Put simply: in NSW, a vendor does not have to volunteer every minor defect or maintenance issue, but the vendor does need to ensure that the contract for sale contains the prescribed documents and that the purchaser is not misled about the property, its title, its approvals or any material issue affecting it.

NSW does not have a broad “vendor statement” system

Unlike some other Australian jurisdictions, NSW does not use a single, all-purpose vendor disclosure statement for ordinary residential sales. Instead, disclosure is largely dealt with through:

• the contract for sale of land and its prescribed attachments;
• specific statutory disclosure requirements for certain property types or features; and
• the general legal prohibition against misleading or deceptive conduct, false representations and concealment of material facts.

That means proper contract preparation is critical at the very start of the sale campaign.

A contract for sale must be prepared before marketing

In NSW, a property must not be marketed for sale until a proposed contract for sale has been prepared and is available for inspection.

That contract will usually be prepared by the vendor’s solicitor or conveyancer and should include the documents required by NSW conveyancing legislation and practice.

What must usually be disclosed in the contract?

For a standard residential sale, the contract for sale ordinarily needs to include prescribed documents that tell the purchaser important information about the property. These commonly include:

• a copy of the title search or folio identifying the land;
• copies of any registered dealings affecting title, such as easements, covenants or restrictions on use;
• the deposited plan or other relevant plan;
• a sewer service diagram; and
• a planning certificate issued by the local council under section 10.7 of the Environmental Planning and Assessment Act 1979 (NSW).

These documents are important because they disclose matters such as:

• the legal description of the land;
• whether there are easements, rights of way or restrictions;
• zoning and planning controls;
• whether the property is affected by road widening proposals or other planning matters recorded by council; and
• the location of sewer infrastructure.

If the prescribed documents are missing or inaccurate, the purchaser may gain rights to rescind the contract in some circumstances.

Title issues must be disclosed accurately

A vendor must ensure that the contract properly discloses matters affecting title. These may include:

• easements benefiting or burdening the land;
• restrictive covenants;
• positive covenants;
• leases or tenancies that will continue after settlement;
• caveats or other registered interests;
• rights of carriageway, drainage or access; and
• any other title encumbrance that affects the purchaser’s use or enjoyment of the property.

If the property is being sold subject to a tenancy, that should be made clear. A purchaser usually expects vacant possession and must be informed if an occupant will remain in possession (living in the property) after completion.

Planning, zoning and council matters are often central

A vendor should take care not to make statements about the property that are inconsistent with the planning position or council records.

Examples include statements that the property can be used for a purpose that is not actually permitted, or that renovations were approved when they were not.

Issues that often need careful disclosure include:

• current zoning and planning controls;
• heritage listing or conservation restrictions;
• outstanding council orders or notices;
• unauthorised building works or structures;
• bushfire, flood or other environmental planning designations shown on the planning certificate; and
• road proposals or resumptions affecting the land.

A common risk area is unapproved works. If a garage conversion, studio, deck, pergola or extension was built without the required approval or certificate, the vendor should avoid representing that it is fully approved unless that can be substantiated.

Swimming pools and spas require particular attention

If the property has a swimming pool or spa, there are additional NSW requirements.

For most sales of residential property with a pool or spa, the vendor will need to provide one of the documents permitted under the Swimming Pools Act 1992 (NSW), such as a valid certificate of compliance or certificate of non-compliance, depending on the circumstances.

This should be addressed before the property goes to market, because pool compliance issues can delay exchange or settlement.

Strata and community title properties have extra disclosure requirements

If the property is a strata lot, community title lot or otherwise part of a scheme, extra documents and disclosures will usually be required.

Depending on the title structure, this may include documents such as:

• a section 184 certificate for a strata lot;
• registered by-laws;
• community management statements; and
• details of levies, insurances and scheme obligations.

These documents can reveal matters that are highly relevant to purchasers, including unpaid levies, special levies, by-law restrictions and ongoing building issues.

The vendor and agent must not mislead purchasers

Even where a matter is not expressly listed in a prescribed document, the vendor and the agent must still avoid misleading conduct.

In NSW, a selling agent is required to disclose material facts known to the agent. A material fact is something that would be important to a reasonable purchaser in deciding whether to buy and on what terms.

Examples may include:

• a serious defect or risk affecting the property;
• a significant council or statutory notice;
• a dispute that materially affects the property;
• known contamination or safety issues; or
• a feature of the property that has been represented inaccurately in advertising.

The exact scope of what is “material” depends on the circumstances. The safest course is accuracy, consistency and early review of any unusual issue.

What does a vendor usually not have to disclose?

NSW still operates largely on the legal principle of “caveat emptor” or purchaser beware basis in relation to the physical condition of property. That means a vendor is not usually required to volunteer every visible or minor defect that a purchaser could discover through inspection.

For example, a vendor will not generally need to prepare a list of every cosmetic issue, worn fitting or maintenance item.

However, that does not mean a vendor or their agent can:

• lie about the condition of the property;
• conceal a serious problem after being asked directly about it;
• make half-true statements that create a false impression; or
• advertise features or approvals that do not exist.

In short, there is a difference between not volunteering every minor issue and actively misleading a purchaser.

Common examples of issues that should be reviewed before sale

Before listing the property, a vendor should review whether any of the following apply:

• an extension or renovation was carried out without council approval or a final certificate;
• there is a current tenancy or informal occupancy arrangement;
• the property is affected by an easement, covenant or right of way;
• council or another authority has issued an order, notice or compliance direction;
• there is a pool or spa without current compliance documentation;
• the property is strata or community title;
• part of the land is used in a way that differs from its lawful approval;
• there is a known boundary or fencing dispute; or
• marketing material describes features that may not be legally approved.

These issues do not always prevent a sale, but they should be dealt with properly in the contract and the marketing.

What happens if disclosure is wrong or incomplete?

If a vendor fails to disclose required matters, or if the contract is defective, the consequences may include:

• the purchaser rescinding the contract;
• delay to exchange or settlement;
• demands for compensation;
• a dispute over misrepresentation;
• claims arising from misleading or deceptive conduct; or
• complaints involving the selling agent.

In many sales, the problem is not deliberate concealment but poor preparation at the start of the transaction.

A practical approach for NSW vendors

A sensible disclosure process usually includes:

1. obtaining legal advice and instructing a solicitor or conveyancer before the property is advertised;
2. ordering the title documents and prescribed certificates early;
3. identifying any unapproved works or outstanding notices;
4. checking whether there is a pool, spa, tenancy or scheme title issue;
5. ensuring the agent’s advertising is consistent with the true legal position; and
6. answering purchaser enquiries accurately and carefully.

Final word

When selling a house in NSW, the key disclosure obligations usually fall into three broad categories:

• the prescribed documents that must accompany the contract for sale;
• accurate disclosure of title, planning, approval and occupancy issues; and
• avoiding any misleading or incomplete statements to purchasers.

A vendor is not required to provide a running commentary on every minor defect, but the vendor should not assume that silence is always safe. If a matter affects title, lawful use, approvals, occupation or a reasonable purchaser’s decision-making, it should be reviewed carefully before the property goes to market.

Contact us for a free thirty-minute consultation with one of our team. 

Any information on this website is general in nature and should not be taken as personal legal advice. We recommend that you speak to a lawyer about your personal circumstances.