Major Reform to Disclosure Obligations for Property Vendors

Introduction

In Victoria, the Sale of Land Act 1962 (Vic) (Act) prescribes the various information that shall be disclosed about a property in a Vendor's Statement when selling a property. A failure to comply with the Act may result in a purchaser being able to rescind a Contract of Sale.

Recent Amendments to the Act

The Sale of Land Amendment Act 2019 (Vic) has introduced significant amendments to Section 12(d) of the Sale of Land Act 1962 (Vic), criminalising misleading or deceptive conduct and the concealment of “material facts” in property transactions. This legislative reform highlights the increased emphasis on ensuring complete and truthful disclosure in property transactions.

Material Facts and Penalties

There remains uncertainty regarding what constitutes “material facts.”  However, they are likely to include the prior use of the property for unlawful activities, structural defects in the property or foreshadowed developments in the vicinity of the property that could impact the property's value or use.

Failing to disclose “material facts” carries severe legal consequences including fines of up to 120 penalty units for individuals or 600 penalty units for corporations. Additionally, individuals may face imprisonment for up to 12 months.

Further, under the Australian Consumer Law and Fair Trading Act 2012 (Vic), individuals may be fined up to 500 penalty units, while corporations could face fines of up to 2500 penalty units. In certain cases, individuals may also face imprisonment for up to five years.

Conclusion

Accordingly, it is important that Vendors obtain legal advice about the recent changes to the Act before proceeding with any sale of the property to ensure that they disclose, if necessary, any “material facts.”

If you require legal assistance, please contact Chris Moshidis, Director and Principal Lawyer on +61 9521 7956 or chris@urbanlawyers.com.au.