The real estate industry in Australia is a very diverse and dynamic one that makes it stand out from other markets worldwide.
According to the Australian Bureau of Statistics, the total value of residential dwellings in Australia was AUD 8.1 trillion as of June 2021, representing a 7.1% increase from the previous year, which makes it stand out from the rest of the global markets that performed amazingly well despite the COVID-19 disruptions.
Also, the CoreLogic Home Value Index revealed that property values in Australia have consistently risen over the last couple of decades, marking an average annual growth rate of 6.8% from 1980 to 2021.
These numbers highlight the strong and stable nature of the Australian real estate market, making it an attractive option for both local and international investors.
Are real estate disclosures essential to acquiring property in Australia?
Yes, real estate disclosures are needed as part of the key requirements when purchasing property in Australia, which also includes property inspections, sales contracts, legal advice, and finance approvals, among others.
However, real estate disclosures should never be neglected as failure to understand it can result in legal problems, disputes and worse, significant financial losses.
In Australia, it is mandated by law that sellers need to disclose any known defects or issues with the property for sale to potential buyers.
These disclosures must include anything from structural issues to environmental hazards.
Unfortunately, there are sellers who deliberately conceal defects or issues with the property so they could sell it for a higher price.
For example, in 2019, a real estate agency in Sydney was fined $20,000 for misleading advertising on a property they listed for sale and advertised a property as having four bedrooms when it only had three.
This type of misleading advertising can be especially problematic for potential buyers who rely on the information provided by the seller or their agent.
It is important for buyers to do their due diligence when purchasing a property.
This includes conducting thorough inspections of the property and seeking professional advice from experts such as building inspectors and solicitors.
Buyers also need to review all available disclosures and ask the seller or their agent any questions they may have when in doubt.
They can also seek help from government agencies such as the Australian Competition and Consumer Commission (ACCC) and state-based consumer affairs offices.
These agencies provide information on consumer rights and assist with disputes between buyers and sellers.
What makes a real estate disclosure?
It is crucial that you understand what makes a real estate disclosure, so that you would know how to avoid making wrong and costly decisions when purchasing property.
For instance, one of the key legislations that govern real estate disclosures is a vendor statement known as Section 32, which is a legal requirement in Victoria that mandates property sellers to disclose information before signing a contract of sale.
The statement contains important information about the property’s title, zoning, any encumbrances or easements, and any known defects or issues.
There are several other regulations that are required by law to include certain information in real estate disclosures throughout Australia, depending on which state or territory, which may include:
Consumer Law
The Australian Consumer Law (ACL) requires sellers to provide accurate and complete information about the property to potential buyers.
Information such as defects, zoning restrictions, or environmental hazards that may affect the property’s value are mandated by law for disclosure to the potential buyer.
Building and Pest Inspections
Buyers are typically encouraged to obtain building and pest inspections before purchasing property in Australia.
These inspections can identify any structural issues, pests, or other defects that may not be visible to the naked eye.
Strata Schemes
In New South Wales, sellers are required to provide certain documents to potential buyers in strata schemes, such as the strata plan, by-laws, and financial statements.
These documents can help buyers understand their rights and obligations as owners in a strata scheme.
Environmental Regulations
Some properties may be subject to environmental regulations, such as contamination from chemicals or hazardous waste.
In these cases, sellers may be required to provide disclosure statements about any known contamination or hazardous substances on the property.
Heritage Listings
Properties that are listed on a heritage register or have heritage overlays may be subject to additional regulations and restrictions.
In these cases, sellers may be required to disclose any restrictions on development or alterations to the property.
As mentioned before, the specific contents of a real estate disclosure may vary depending on the location and type of property, but generally, it may include:
Property Details
This includes basic information about the property, such as its address, size, and age.
Zoning Information
It outlines the property’s zoning designation and any applicable zoning regulations.
Property Condition
Information must be provided about the condition of the property, including any defects or issues that the seller is aware of.
Utilities and Services
This lists the utilities and services that are available to the property, such as electricity, water, and gas.
Legal Information
This contains any legal information or disclosures required by law, such as any known defects or hazards on the property, or any disputes or liens that may affect the property’s title.
Homeowners Association
If the property is part of a homeowners association, this section will provide information about the association’s rules, fees, and other requirements.
Environmental Information
This section may include information about any environmental hazards or risks associated with the property, such as flood zones, asbestos, or lead paint.
Conclusion
Buying a property is a significant investment, and it is crucial to have all the information necessary to make an informed decision.
It is important for buyers to research the specific regulations and disclosure requirements in their state or territory before purchasing property.
Working with a professional real estate agent or solicitor can also help ensure that all legal requirements are met and that buyers have access to all the information they need to make their choices prudently and wisely.