What is a Material Fact?
A material fact in real estate refers to any fact about a property that could influence a buyer's decision to purchase or the price they are willing to pay. Under NSW real estate laws, real estate agents must disclose any material fact that they are aware of and that a reasonable buyer would consider important.
Examples of material facts include:
- Structural issues, defects, or pest infestations
- Flooding or bushfire risks
- History of violent crimes or drug-related activities (e.g., methamphetamine contamination)
- Development proposals that may affect the property (e.g., road widening, rezoning)
- Outstanding council notices or orders on the property.
Failure to disclose material facts can lead to fines and disciplinary action under the Property and Stock Agents Act 2002 (NSW).
Vendor Obligations When Selling a House in NSW
As a vendor, you have several legal obligations under NSW real estate legislation, including:
-
Disclosure Requirements
- The vendor (or their agent) must disclose all material facts that could affect the buyer's decision.
- Any easements, covenants, or restrictions affecting the property must be disclosed.
2. Contract for Sale & Required Documents
Before advertising a residential property for sale, the vendor must have a complete contract for sale that includes:
- Title details
- Zoning certificates
- Sewerage diagrams
- A copy of any lease agreement (if the property is tenanted)
- Any required compliance certificates.
3. Insurance & Home Building Compensation Cover
If the property includes residential building work completed in the last six years, the vendor must provide a home building compensation insurance certificate to cover potential defects.
4. Expression of Interest Deposits
If a buyer pays an expression of interest deposit, the vendor's agent must inform them in writing that:
- The vendor is not obligated to sell.
- The deposit is fully refundable if no contract is signed.
5. Informing the Vendor About Offers
The agent must inform the vendor of all offers received unless the vendor has given written instructions not to be notified.
6. Underquoting Laws
Vendors and agents must not advertise or provide price estimates that are lower than their true expectations (known as underquoting).
- The advertised price must reflect a reasonable estimate based on market conditions.
Penalties for Breaching Vendor Obligations
Failing to disclose material facts or comply with vendor obligations can result in:
- Fines up to 200 penalty units (approx. $22,000)
- Possible revocation of the real estate license (for agents)
- Potential legal action from buyers for misrepresentation or breach of contract.
Selling a Property in NSW? Protect Yourself & Stay Compliant
Avoid legal risks and ensure a smooth, hassle-free sale by meeting all your vendor obligations.
Need expert guidance? Speak to a real estate professional today.
Contact Century 21 Newcastle for Assistance
Email: newcastle.com.au">hello@c21newcastle.com.au
Phone: 02 4943 6333
Address: 155 Pacific Highway, Charlestown NSW 2290