When selling a house in South Australia, one of the most important legal obligations is providing the potential buyer with a Form 1 document. This is the primary source of property disclosure, outlining essential details about the property. But what exactly must you disclose when selling a house?

It’s a common question among sellers navigating the complex process of property transactions. Whether it’s informing potential buyers about easements, zoning issues, or any known defects, full transparency is crucial to avoid legal disputes down the road. Understanding what needs to be disclosed can help streamline the sales process and build trust with interested buyers.

Home selling in South Australia is booming, and our team of experts is here to help you across all areas of buying or selling a property. So, whether you’re eager to finalise the sale of your listed property, or you’ve made an offer to purchase the home of your dreams and are excited to sign the contract of sale and move into the cooling-off phase, you can’t do this in South Australia without coming into contact with a document known as the Form 1 (or vendors statement).

What must you disclose when selling a house?

It’s essential to understand the legal requirements for disclosure to avoid complications during the property sales process. Sellers are obligated to provide certain information to potential buyers, which can significantly impact the property’s value and the buyer’s decision-making process. Here are the key things you must disclose:

1. Pre-Contractual Disclosure Obligations

Pre-contractual disclosure focuses on any legal limitations or “defects” in the property’s title, which might affect the buyer’s use or ownership of the property. These include:

    • Easements: If the property includes an easement, such as a shared driveway or a right-of-way for utility services, this must be disclosed as it could restrict future development.
    • Covenants: Covenants impose obligations on the property owner, such as maintaining certain landscaping standards or adhering to building restrictions.
    • Leases: If the property investment is under an existing lease agreement, the terms of this lease must be disclosed, as it could bind the buyer post-settlement day.
    • Zoning: Zoning regulations that could affect land use must be disclosed. In Adelaide, sellers must declare if the property is in a bushfire-prone zone, as this impacts insurance and development.

2. Building Consent and Unapproved Structures

If you have made any renovations or improvements to the property, you must confirm that all work is up to code and approved by the relevant authorities. If the property includes unapproved structures such as patios, pools, or extensions, these need to be disclosed. Failure to do so could lead to legal penalties and could delay settlement as buyers may request approvals before proceeding with the purchase.

3. Property Defects

While not a legal requirement in South Australia, it is prudent to disclose significant property defects, such as structural issues, dampness, termite infestations, or faulty fixtures. While most buyers will be advised to obtain a building inspection, providing this information upfront can prevent disputes and facilitate a smoother process. Deliberately concealing known information that would impact the purchaser negatively is not a good idea.

What is a seller obligated to disclose?

No matter what type of property they are selling, the vendor will be asked a comprehensive list of questions by the Form 1 preparer (this is typically a real estate agent or a Form 1 specialist such as an Eckermann Property Forms team member). This is to determine information about the property that cannot be obtained by government or council searches. These answers, together with the required statutory search responses, will enable completion of the Form 1, and are a crucial element in meeting your obligations when it comes to disclosure. 

Even though it is the responsibility of the real estate agent (or vendor if not using an agent) to prepare or engage a professional to prepare the Form 1, a vendor needs to ensure that they disclose the correct information so that the Form 1 is accurate. As a vendor, it is an offence to fail to give the purchaser a complete and accurate Form 1, subject to some limited exceptions. This is why it is crucial to engage professional  assistance to guide you on what you must disclose when selling a house.

If you are a purchaser, it is important to look carefully at the information that has been disclosed. If you are not regularly involved in the sale and transfer of property, you might not capture the full meaning of some of the terms that can appear, so it is recommended that you have your conveyancer on hand at this important stage to check over it for you, particularly to ensure that you will be able to use the property for the purposes you intend to use it for. 

What must I be aware of when buying a property?

It is the responsibility of the purchasers to make sure that they are happy with the condition of the property they are purchasing – including that any buildings or structures on the property are structurally sound or free of serious pest or other damage. This is why we are strong advocates of getting quality building and pest inspections during the cooling off period or prior to an auction. Competent building inspectors who follow the Australian Standard, will apply special techniques to ‘see things’ most of us would miss and these oversights can potentially cost a large amount of money to rectify.

Do the activities of past owners or occupiers need to be disclosed?

Some buyers may be sensitive to knowing whether certain activities or events have taken place on a property or in a house. However, it depends on what these events or activities were, as to whether there is the requirement for a vendor to disclose them (if, of course, they are in fact aware of their occurrence). 

What happens if a seller does not disclose?

If a vendor deliberately tries to hide a known defect, such as concealing serious white ant damage or structural issues, the purchaser could have recourse to lodge a claim for financial damages after settlement. This is also the case if the vendor provides deliberate false information to questions from a purchaser about the property. However, in these situations, the purchaser would likely need to be able to prove that the vendor was deliberately misleading or deceptive in their actions. 

What are the legal requirements when selling a house?

If a property was tenanted before sale, a landlord now selling a property, for example, may not have full knowledge of the events which may have taken place in the home while it was tenanted. However, if for example, it was discovered that tenants ran a drug lab on the property, the owner would be legally obligated to disclose this in the Form 1 under the section which covers particulars relating to environmental protection.

Additionally, there are no legal requirements in South Australia to disclose whether someone has died or even been murdered in the property.  The main issue around this type of disclosure being legally enforced revolves around how far any duty of disclosure would reach. Someone who has owned a property for the last ten or so years, for example, couldn’t realistically be expected to know about a death or upsetting event which took place in the property prior to their ownership. However, if a purchaser asks the agent or the vendor if they are aware of something like this occurring on the property then the vendor should not withhold any knowledge they might have of these types of events.

Eckermanns can help you with your disclosure questions

With almost 50 years in the industry, our team of experts know the ins and outs of selling a home and have you covered for everything from private sale contracts to residential land subdivision. The earlier we are engaged in the process of buying or selling property, the more we can do to ensure the process of transferring a property is as smooth as possible or to allow us to help iron out any bumps or creases we come across along the way. Contact the team at Eckermanns on 08 8366 7900 for any assistance.

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