When showing buyers through a property, you always want to focus on a property’s best features. As you all know all too well, you also need to point out certain things on the property that need to be disclosed to potential purchasers (such as unconsented building work, asbestos or leaks). But what if the issues are on the other side of the fence, outside the boundary of the property? Agents need to disclose to potential buyers’ information about neighbouring properties that may deter them from offering on the property.
One example comes from a complaint to the REA in 2016. In that case, an agent withheld information about proposed activity on an adjoining section. The activity would involve up to 93 truck and trailer loads of clean fill being delivered to the neighbouring site each day, six days a week for the next 10 years. While the vendors told the agent that they were unaware of any pending works on adjoining properties, the consent for the activity was issued over four years prior and had been disclosed to the agent when she acted for the vendors when they bought the property.
The committee decided that the agent was in breach of Rule 6.4 (not to mislead or withhold information) because of her prior knowledge and widespread concern in the community, she had an obligation to investigate matters realigning to the proposed activity. (Complaint No: C17934)
In a more recent complaint in 2020, two salespeople where censured and fined for not disclosing building work about to occur on a neighbouring property. Once again, the vendor had not included this information in their disclosures to the agent, but the beginning of work was plainly visible from the property. (Complaint No: C32246).
The above examples seem to impose an obligation on agents to investigate matters further, rather than just relying on information from the vendor. So how can agents meet their disclosure obligations for issues next door?
Just providing a LIM report to potential buyers will not be sufficient. However, if the relevant parts of the LIM report are highlighted and pointed out to buyers this should be enough. It is also recommended that any verbal disclosures are confirmed to buyers in writing.
You also need to trust your gut – agents are property professionals who are expected to know what matters will be relevant to buyers, even when they are not disclosed by the vendor.
It is important to remember that you cannot disclosure anything to buyers without consent from the vendor. If a vendor does not consent to disclosing ‘important information’ about the property, you are required to stop working for them.
If you are on the fence about whether an issue need to be disclosed to buyers, recent decisions have proven that honesty is always the best policy.