Mid Mountains Legal Blog

Caveat Emptor – Let the Buyer Beware

Anthony Steel

The law in New South Wales relating to the purchase of real estate is still summarised by the Latin phrase ‘Caveat Emptor’, meaning ‘let the buyer beware’.

The onus is on a buyer to ensure that they are satisfied with the condition of a property before signing the contract. Given the expense of purchasing real estate, it pays to spend some time addressing things you need to know.

What must the vendor tell me?

Although the onus is on the purchaser to conduct their own enquiries when purchasing a property, the Conveyancing Act 1919 provides a list of certificates and documents which must be included in every contract for sale for residential real estate, including the following:

  • title search;
  • sewer diagram;
  • council zoning certificate; and
  • any dealings noted on the title which affect the land.

At the time of listing the property, the real estate agent must possess a contract for sale with these documents attached, a copy of which can be obtained from the real estate agent at no fee. This gives a buyer access to the terms and conditions of the contract, the title, dealings, council and water certificates without incurring the time or expense of ordering those documents.

Whilst the contract is a great place to start, its not the end of a buyer’s due diligence. We review and explain the contract’s terms and conditions and attached documents, especially the dealings on title, which often disclose restrictions on the land, easements or covenants.

Does the vendor make any promises about the property?

It is the buyer’s responsibility to be satisfied with the condition of the property. Generally, there will be an express term in the contract for sale confirming that the buyer has not relied on any representation as to the property other than what has been disclosed in the contract. Despite this, the Conveyancing Act 1919 provides that in every contract for sale of residential land the vendor is taken to have given certain warranties.

These warranties include that:

  • the property is not subject to a heritage order;
  • the land does not contain any part of a sewer;
  • the council certificate is accurate and specifies the true status of the land;
  • the land is not affected by any proposal for alignment, widening or levelling by a government authority (such as Roads and Maritime Services); and
  • that there is no matter which would justify the making of a demolition or upgrading order regarding any structure or building on the land.

These warranties are subject to the information being disclosed in the contract: for example, the vendor’s warranty as to a sewer does not relate to the sewer set out in the sewer diagram attached to the contract. If the vendor breaches these warranties then the purchaser has the right to pull out of (‘rescind’) the contract upon the conditions set out in the legislation being met.

What can I do to discover problems?

Each property is different both in terms of the quality and condition of the buildings and the restrictions and notations on the title. We will advise you of the searches and enquiries which can be obtained to minimise the risks associated with buying a property, although ultimately the decision is yours. Some of the steps which can (and often should) be taken are:

  • Strata report- when the property being purchased is part of a Strata Scheme (such as an apartment / unit complex);
  • Pest and Building reports to ascertain the condition of the buildings;
  • Title insurance to protect from fraud and forgery and some of the above mentioned risks;
  • Survey to ascertain the exact boundary of and the location of the structures on and surrounding the land;
  • Building certificates to ensure there will be no demolition or upgrading orders concerning the structures on the land;
  • Government enquiries as to road widening, levelling or other proposals which may affect the land.

What now?

We can assist you to obtain the appropriate reports, at short notice if required. We explain the costs and benefits of each and give you comprehensive advice concerning the terms of the contract for sale and the attached documents. Contact us if you are about to buy or have negotiated the purchase of a property.

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