Should sellers have to provide mandatory building inspection reports to prospective purchasers?
Can flood-prone Queensland homes be sold without sellers or agents volunteering the soggy truth? Yes!
BY TIM O'DWYER - Qld Solicitor May 24, 2010
What if sellers don't 'fess up if there's no record of council inspections? They can sell regardless!
What if a seller's carport, garage or deck was built illegally? No selling worries!
What if a home is termite-riddled? Don't tell!
And if sellers obtain a pre-sale building report showing heaps of problems? Don't mention the report!
This is why 'buyer beware' is the first unwritten rule of real estate in Queensland. Will it stay that way? Yes. Because Queensland's government refuses to legally oblige home sellers to disclose material information to prospective buyers.
No matter that seven years ago the ACT Labor Government introduced reforms which (not unreasonably) require sellers, before putting a property up for sale, to give to buyers details of building approvals and inspections together with current building/pest inspection reports. The Northern Territory Labor Government is currently proposing to bring in disclosure legislation whereby sellers must (not unreasonably) give buyers swimming pool compliance certificates, flood information and reports on whether structures comply with building laws. And the New South Wales Labor Government will shortly require sellers (not unreasonably) to give buyers building/ pest inspection reports.
When a disgruntled homebuyer recently complained to Queensland Fair Trading Minister Peter Lawlor about expenses needlessly incurred because a seller and an agent failed to disclose building defects and illegal structures, the Minister's unsympathetic reply merely stated the problem:
While a real estate agent needs to verify the material facts when selling a property and encourage the seller to disclose all information, there is no obligation or legal requirement for the agent or seller to conduct building and pest inspections, or conduct council approval surveys prior to listing a property for sale."
Pest and building inspections and council approvals are the responsibility of the purchaser,? he unhelpfully explained.
Earlier this year two estate agents, genuinely concerned about this less-than-satisfactory state of affairs, joined me to meet Minister Lawlor to press the case for full seller-disclosure - for the benefit of buyers, sellers, solicitors and agents alike. We firstly gave him a can of baked beans, and pointed out how much the label tells a baked beans buyer. By comparison, we continued, Queensland's homebuyers are told zilch about flooding, termites, outstanding approvals, illegal structures and the like, while standard contract clauses give little redress if buyers' searches and inspections later uncover matters of concern.
The Minister's written response was disappointing.
He explained that, with the regulation of property transactions being subject to a complex range of local and state legislative requirements, the government would not consider placing a ?full? disclosure onus on sellers: As the circumstances surrounding individual property sales are so diverse, this form of disclosure could not be readily prescribed or guaranteed.
The Minister wasn't convinced that requiring disclosure would significantly enhance Queensland's consumer protection regime. Nor would it be appropriate, he added, to include seller disclosure requirements in Queensland's Property Agents & Motor Dealers Act which specifically regulates the activities of real estate agents, not the conduct of their clients or customers.
The Minister believes that legally requiring pre-contract disclosure would shift costs to sellers without any guarantee of independence or accuracy. Not only would a further layer of costs be added to the sale process but also, he suggests, buyers might still have to conduct their own independent enquiries.
So, that is why disclosure is a dirty word in the Sunshine State - except for the largely unwanted, widely criticised and initially ill-conceived mandatory sellers' sustainability declarations introduced by the government this year.
Tell us what you think! Should sellers be required to provide mandatory building & pest inspections to prospective purchasers?
Eureka! Comment: It really is about 'Buyer Beware". We would encourage all buyers to do their own due dilligence regardless. It would be madness to rely on the sincerity of any pest and building report not undertaken by a Pest and Building Inspector of your choosing, employed by yourself and whos bias in the transaction cannot be questioned.
It's not the cost of such reports or council inspections to be concerned with - it should be the cost of NOT having them done and having some 'nasty surprises' you should be worried about. The cost of these reports are nothing by comparison to the cost of the property you are purchasing - a small price to pay for peace of mind!