A vendor’s duty of disclosure in a property sale
Did you know that when you sell real estate:
A seller has a duty to disclose certain matters about the property whether or not the purchaser has asked about those matters?
And that a failure to disclose those matters can result in the termination of the contract?
Depending on the timing, termination can, and often will have, severe financial consequences for the vendor?
Generally, a vendor must disclose:
Latent (hidden) defects in the title to the land and improvements upon the land (which are to be sold with the land)
Patent (obvious) defects material to the purchaser’s purchase, where the vendor is aware of the defect and also aware that the defect is material to the purchaser’s purchase.
Errors and misdescriptions as to title that the Vendor is aware of.
Defects in the quality of the subject matter of the sale where the vendor is aware the defect is material to the present value of the property or to the purchaser’s ability to form an informed assessment of that value.
The Vendor does not need to disclose:
Town planning or regulatory restrictions that relate to the quality and value of the property (not the title).
However, where town planning and regulatory restrictions are material to the purchaser, and the vendor is aware of this, where the purchaser refuses to continue the contract, a court may refuse to make the purchaser continue the contract or require the vendor to repay the purchaser their deposit.
Note that active concealment of patent defects by a vendor may amount to fraud.
