It’s essential to know your material facts before buying a property

Do you know what material facts are? Straight from the Consumer Affairs Guidelines, a material fact is: “a fact that would be important to a potential purchaser in deciding whether or not to buy any land. In the context of a proposed sale of land, a material fact is one that influences a purchaser in deciding whether or not to buy any land at all, or to buy land only at a certain price.”

 Materials facts then fall into one of two categories:

1. Generally: a fact that an average, reasonably informed purchaser with a fair-minded understanding of the property market, including the role of an estate agent, would generally regard as material in their decision to buy land.
2. Specifically: if a fact about land is known by the vendor (or the vendor’s agent, including an estate agent) to be important to a specific purchaser, it can be material, even if other agents and consumers would not generally consider that fact to be important or of significance to them. This knowledge could arise if (for example) a particular purchaser:
   1. asks a specific question about the land of the vendor or the vendor’s agent (including their estate agent), and/or
   2. where a purchaser informs the vendor/agent of their intended use of the land.

Source: Consumer Affairs Victoria.

Why are material facts important to the purchaser?

The reason it’s important to know everything about a property before you go in is because these pieces of information, when put together with all of your other requirements, can influence your decision to buy the property. For example, factors can be:

• Known building defects or damage.
• Existence of pest infestations like termites.
• Existence of combustible cladding or asbestos.
• Development approvals or proposed development plans nearby.
• Past use of the property for illegal activities or serious crimes that have occurred.
• Soil contamination such as pesticides used in horticulture, PFA’s from fire brigade training, or things like arsenic from historic mining.

It can even include smaller things like the air conditioner not working, a window that needs repairing or perhaps some previous works done to the property (with or without a permit).

Any of these things could impact your decision to purchase a property and it shouldn’t be up to your buyer’s advocate, conveyancer or building inspector to uncover them, if they are already known to the vendor.

Who’s responsible for disclosing material facts?

The real estate agent should really be disclosing everything they know, even if you haven’t asked, as the onus is on the vendor and the real estate agent to disclose everything they know.

If they are unaware or don’t know then they can say so, the vendor is not under any obligation to make enquiries into unknown possibilities. But they aren’t allowed to conceal (either intentionally or by omission) something that may be material to the prospective buyers’ decision to purchase the property.

When are material facts disclosed?

As mentioned above, it’s not up to the buyer to “uncover” material facts – if the vendor and agent are aware of something then they need to disclose it to the buyer. This could be in section 32 or it could be in conversation with the real estate agent and purchasers who have shown further interest in acquiring the property. If they knowingly withhold or conceal a material fact, fines of nearly $20,000 apply.

Should you be required to make your own enquiries?

We always recommend clients make their own enquiries, particularly with respect to things like a building and pest inspection (the vendor might not know there is a defect such as water damage to the frame) and with the local council about developments (plans may have been approved which the vendor and agent know nothing about).

Do you know what questions you should be asking along the way?

Which brings us to the next part of the discussion. When inspecting a property, do you know what questions you should be asking the agent and/or vendor, building inspector, local council, etc.?

We’ve created a handy material facts checklist you can use when attending open for inspections. You can download it here:

Download Material Facts Checklist

Not sure where to start when it comes time to ask questions of the agent? Get in touch, our property team can give you advice and guidance specific to your situation.

Disclaimer: this checklist is provided as a general guide to assist clients and potential clients. It is for general information purposes and should not be relied on as personal credit or property advice.