Omega Legal will help ensure vendors fully understand what they are required to disclose in a contract for sale of land. This protects them from losing the purchaser and even worse, being liable to pay the agent’s commission when no sale has settled.

The financial and legal consequences for a vendor who has failed to make adequate disclosure in their contract for sale is demonstrated in a recent Supreme Court of NSW case, Huang v Ceylan [2018] NSWSC 306.

In this case, the vendor had a two bedroom apartment with a media room, but decided to convert the media room into a third bedroom so they could sell the property at a higher price. However the vendor had failed to disclose in the contract that the conversion of the media room was done without their council’s approval, consequently the conversion was “illegal building work”.

The vendor also marketed the property as a three bedroom apartment. However the purchaser was told by the valuer that the property was originally approved as a two bedroom apartment. Having learned this, the purchaser sought to terminate the contract on the ground that the vendor breached a statutory warranty under the Conveyancing (Sale of Land) Regulations and demanded refund of the deposit. The vendor refused and argued the purchaser breached the contract.

The court decided that the erection of the wall in the media room was not an exempt development. As the vendor failed to obtain approval from their council for the conversion of the media room, this meant illegal building work had been done on the property. Hence, the council has right to order the demolition of the illegal building work. Consequently, the vendor’s failure to disclose the illegal building work in the contract meant they breached a statutory warranty and the buyer could rescind the contract at any time before settlement.

This case is a timely reminder to every vendor that when selling a property, every care should be taken to ensure adequate disclosure regarding the property is made. So, before you put your property on the market, speak with our lawyers at Omega Legal to avoid losing a buyer and potentially paying the price!

On the other hand, if you are a purchaser, ensure you protect yourself from potential illegal building work on the property. Remember to undertake proper due diligence before committing to the contract or obtaining appropriate title insurance. Contact us for a free consultation to discuss your options.