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Disclosure of death

Disclosure of death

By Russell Cocks

Disclosure 


Does a vendor of real estate have an obligation to disclose that a death occurred on the property? The underlying principle governing the relationship at common law between a vendor and a purchaser is caveat vendor – let the purchaser beware. The application of that principle would mean that a purchaser should conduct its own inquiries in relation to the antecedents of the property and that the vendor has no obligation to voluntarily disclose the circumstances of any deaths and, indeed, whether such deaths occurred. The vendor could not actively mislead the purchaser, as misrepresentation is an exception to caveat emptor, but only in the limited circumstances of a positive misrepresentation. Misrepresentation by silence is not known to the common law in this regard and a vendor who avoided making any positive misrepresentations was safe. However, the vendor’s common law disclosure obligations have been substantially supplemented by the statutory obligations set out in s32 of the Sale of Land Act. These include the obligation to disclose title restrictions, planning obligations and the service of any notices affecting the land, but none of the many obligations imposed by s32 appear to extend to an obligation to disclose that a death occurred on the property. There is much to be said for the argument that a vendor should not have any obligation in this regard. There are many practical difficulties of deciding which deaths attract the obligation. A sensational murder immediately prior to sale might attract the obligation, but what of the natural death of a long term owner? There are infinite possibilities between these two situations and striking a fair balance would be difficult. And would the obligation be limited to death, what about other crimes like drug production or paedophilia? The law must not shy away from difficult tasks, but these practical considerations highlight the potential difficulties. Some American states, which also apply caveat emptor, have created specific disclosure obligations for what are known as “stigmatised properties”, which cover not only death but also other criminal activity and, perhaps only in America, paranormal activity. An arbitrary period of three years prior to sale (or leasing) is some recognition that death is a natural event. Estate agents Agents are subject to regulation designed to protect both vendor and purchaser. Therefore, while the vendor might not owe a duty to the purchaser, the agent does. A NSW case involving the sale of a home in which two sons had murdered their parents led to an outcry and the vendors voluntarily terminated the contract, preventing a court determination of the issue. However, the agent was found guilty of disciplinary charges for failing to inform the prospective purchaser, and NSW agents are now subject to a specific rule requiring them to bring such matters to the attention of the purchaser. New Zealand has similar requirements in relation to suicide. No such specific ethical obligation exists for Victorian agents but there is a general duty of honesty and best practice that might be used as a basis for a claim by a purchaser. Agents are also subject to the general duties not to mislead or deceive, positively or by silence, created by the Australian Consumer Law and this is likely to be the direction of attack from a disaffected purchaser. Charles Lloyd Property Group P/L v Buchanan [2013] VSC 148 The purchaser sought to avoid a contract based on post-contract discovery that a suicide had occurred on the land. There were many factors against the purchaser, not least of which was a confirmation of the contract by the purchaser after the knowledge of the suicide had been acquired that resulted in the failure of the complaint, but it was somewhat reassuring that the court found that the complaint should be dismissed as it “had no reasonable prospect of success”. Tips: Properties may be stigmatised by criminal activity. Vendors presently probably have no disclosure obligations. Estate agents may be obliged to disclose as a result of their duty to the purchaser. Russell Cocks is author of 1001 Conveyancing Answers. For more information go to www.russellcocks.com.au.

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