An agent must not fail to disclose a “material fact” that the agent knows or our should have taken reasonable steps to make themselves aware of. (An agent should take reasonable steps to gather all relevant information on a property they are selling or renting).

So, what is a “Material Fact”?

The NSW Fair Trading has defined a ‘material fact’ is a fact that would be important to a reasonable person in deciding whether or not to proceed with a particular transaction.

With property transactions there are two factors to consider: –

  1.  Would the fact sufficiently significant or relevant to influence decision on whether to buy, sell or rent.
  2.  Could be the fact impact the market value of the property.

Section 52 of the Property and Stock Agents Act 2002 and regulation 60 of the Property and Stock Agents Regulations 2022 prescribes these kinds of “material
facts” include:

(a)  within the last 5 years the property has been subject to flooding from a natural weather event or bush fire,

(b)  the property is subject to significant health or safety risks,

(c)  the property is listed on the register of residential premises that contain loose-fill asbestos insulation required to be maintained under the Home Building Act 1989, Part 8, Division 1A,

(d)  within the last 5 years the property was the scene of a crime of murder or manslaughter,

(e)  within the last 2 years the property has been used for the purposes of the manufacture, cultivation or supply of a prohibited drug or prohibited plant within the meaning of the Drug Misuse and Trafficking Act 1985,

(f)  the property is, or is part of, a building that contains external combustible cladding—

       (i)  to which there is a notice of intention to issue a fire safety order or a fire safety order has been issued requiring rectification of the building regarding the external combustible              cladding, or

      (ii)  to which there is a notice of intention to issue a building product rectification order or a building product rectification order has been issued requiring rectification of the building         regarding external combustible cladding,

(g)  the property is, or is part of, a building where a development application or complying development certificate application has been lodged under the Environmental Planning and Assessment Act 1979 for rectification of the building regarding external combustible cladding,

(h)  one or more of the following orders, within the meaning of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020, is in force in relation to the property—

       (i)  a building work rectification order,

      (ii)  a prohibition order,

     (iii)  a stop work order.

You can find more information at NSW Fair Trading https://www.fairtrading.nsw.gov.au/housing-and-property/property-professionals/working-as-a-property-agent/misrepresentation-guidelines or contact our friendly property department team on 02 4721 6200 if you would like any further information.

Written by Megan Johnson

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