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Property Alert! Disclosing ‘’Material Facts”

From 23 March 2020, NSW Real Estate Agents & Property Industry Professionals have been subject to new regulations. One of the significant changes is the obligation of agents to disclose material facts to potential buyers.

Author: Marie Russo

12 July 2021

As prescribed in section 52(b) of the Property, Stock and Business Agents Act 2002 (NSW), an agent must not induce another individual to sign a contract or arrangement by failing to disclose a material fact (defined by the Regulation) which the agent knew about or ought to have reasonably known.

This new law assists agents to provide accurate information by clearly outlining material facts they must disclose to buyers. Clause 54 of the Property and Stock Agents Amendment Regulation 2019 prescribes what is considered as a material fact

  • the property was subject to flooding from a natural weather event or bush fire within the last 5 years,
  • the property was the scene of murder or manslaughter within the last 5 years,
  • the property was used for the purposes of manufacturing, cultivating or supplying any prohibited drug or plant within the last 2 years,
  • a person committed suicide in the property within the last 5 years,
  • the property presents significant health or safety risks,
  • the property is listed on the loose-fill asbestos insulation register that is required to be maintained under section 119B of the Home Building Act 1989
  • the property is, or is part of, a building that contains external combustible cladding to which there is a notice of intention to issue a fire safety order or building product rectification order (or such an order has issued); and
  • the property, or is part of, a building where a development application or complying development certificate application has been lodged under the Environmental Planning and Assessment Act 1979 for rectification of the building regarding external combustible cladding.

Agents are encouraged to make reasonable enquiries with their vendor to determine whether there is a material fact which applies to the property. The agent can also contact third parties such as; NSW Fair Trading and local Councils, to acquire more information.

An offence under this section can result in a penalty of 120 penalty units or up to 12 months imprisonment.

Contact the ALG team on (02) 4220 7100 or by email at lawyers@alg.com.au to book an initial consultation.