Material Facts

Disclaimer: The above information is intended to be of a general nature. Please do not rely on any of the content as being a professional tax or legal opinion and seek your own independent advice.

Labelled the “Nanny State”, WA’s residents cope with a raft of laws designed to direct our social behaviours. As a result, service providers like real estate agents are more heavily regulated than ever before.

National Consumer Laws that are now in place are designed, of course, to protect people from unscrupulous practises. There are now stronger requirements to disclose “material facts” in a transaction and heavier penalties exist for those that fail to disclose such matters whether or not there was intent or not to mislead through a non-disclosure.

Mostly, real estate agents are acting for the seller in a residential real estate transaction and therefore have a legal obligation to act under their instructions and in their best interests. Agents also have a fiduciary obligation to obtain the highest and best selling price.


In this sense, the agent is only obliged to be “fair” to a buyer and a duty to disclose material facts are part of this obligation. Whilst there is worthy discussion to be had about what constitutes “material fact”, broadly it can be defined as any piece of information about a property or the transaction that could reasonably impact upon a buyer’s purchasing decision or on the value of the property. For example, if the agent is aware that the rear studio has been built without local government consent then it is reasonable that the buyer should be told.

REIWA agents will make enquiries about a property when listing it for sale and then determine which bits of information justify disclosure being careful not to undermine their duty to act in their sellers’ best interests in the process. For example, is the sellers’ pending divorce really relevant to the transaction? Whilst none of the buyer’s business, there is a perception that the property might be purchased for less if the owners are being cajoled to sell due to separation.

Difficulties arise in determining what is a material fact and therefore a disclosure and what is not. A recent circumstance involved neighbouring land that was owned by the Aboriginal Land Council. Informing would-be buyers of this would be based on prejudice, yet the Consumer Law rules could require agents to disclose possible physical and “psychological” impacts of neighbouring properties. Does this mean then that agents could be obliged to tell a buyer that next door is social housing or that the tenants are young, hold the odd party, have noisy children or are of a certain ethnicity?

Such considerations place agents at some risk of future action by disgruntled buyers not told that next door was, for example, a rented premises and it undermines the clear need for buyers to take at least some responsibility for their buying decisions.

by Hayden Groves
REIWA President
REIA Deputy President

24 All Style Interiors 10x2

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