TO DISCLOSE OR NOT TO DISCLOSE

From our REIWA Body 

 Real estate agents in WA should make sure potential buyers are properly informed. If a property is currently being used as a short-term rental, it is important that this fact is passed on. 

To disclose or not to disclose?

There’s a statutory obligation on agents to make reasonable efforts to ascertain or verify all facts material to any transaction, and reveal these to prospective buyers or tenants. While a Seller’s Disclosure Statement is not mandatory in WA, a purchaser can always ask for one to be filled out.

Deciding on what is a material fact can be tricky. It’s a grey area for agents who try and operate in the best interest of their seller, whilst at the same time being legally required to share facts relevant to the property.

REIWA CEO Neville Pozzi says working out material facts is the responsibility of the agent. “If in doubt as to whether an aspect of a property is a material fact, it is best to disclose as much information as possible to help the buyer or tenant make an informed decision.” 

What is material fact?

It’s any fact, which if known, would impact on the buyer or tenant’s willingness to enter into the sale or lease, or agree to the price.

The problem is that agents may not be aware of all the information regarding a property and so what constitutes a material fact is not always known.

Smart potential buyers made aware of material information can always double check or find out more by doing their research. They can look online or contact the local council to see what approvals have been granted, or need to be received.

However Commissioner for Consumer Protection, Lanie Chopping, encourages agents to do their own homework. “Buyers want to know the history of a property and, where it was used as a short-term rental, whether relevant approvals were obtained. If they are buying a property with the intent to rent it out as a short term rental, buyers want to be able to make informed decisions that the property is capable of meeting their requirements, and agents need to be able to answer these questions”.

Knowing that a property has been used as a short term rental could be a selling point for a potential buyer who is keen on extra income and the idea of this new opportunity might get the sale across the line. But be aware it could also be of concern to some purchasers if many people previously have accessed the premises as short-stay guests.

The other things agents might consider that may be material facts include:

• building approvals;
• structural issues or damage that can’t be seen (e.g. damp, insect infestations);
• access to internet services;
  
• recent relevant history regarding use (e.g. drug production);
• vehicle access;
• proposed developments surrounding the property (e.g. mine site, major roads); and
• sensitive issues (e.g. serious crime or accident).

Honesty pays

Under Australian Consumer Law (ACL) it’s an offence to mislead or deceive parties to a contract. Agents risk significant penalties for not revealing material facts, so it’s not worth the risk.

The State Government is looking into the regulation of short-term renting in WA and will be introducing a new registration scheme soon.

MAKE YOUR OWN DECISIONS AND GIVE IT A REAL GO!!

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