Caveat Emptor – Let the Buyer Beware

The law in New South Wales in relation to the purchase of real estate is still undoubtedly summarised by the Latin phrase ‘Caveat Emptor’, meaning ‘let the buyer beware’.

In practice this puts the onus on a buyer to ensure that they are satisfied with the condition of the property before signing the contract- ‘let the buyer beware!’. Given the expense of purchasing real estate it pays to ensure you have spent some time addressing the matters which you need to know.

What does the vendor need to tell me?

Although the onus is on the purchaser to conduct their own enquiries when purchasing a property the Conveyancing Act 1919 provides a list of certificates and documents which must be included in every contract for sale for residential real estate. Those documents include the following:

– title search

– any dealings noted on the title which affect the land

– council zoning certificate

– sewer diagram

At the time of listing the property the real estate agent must possesses the contract for sale with these attached documents. A copy of the contract with these attached contract can be obtained from the real estate agent at no fee, which means a buyer has access to the terms and conditions of the contract, the title, dealings, council and water certificates without the time or expense of ordering same.

Our property lawyers review the contract’s terms and conditions and documents attached and take great care to explain each and every document, especially the dealings on title which often disclose restrictions on the land, easements or covenants. In summary the contract is a great place to start, but not the end of a buyer’s due diligence.

Does the vendor make any promises about the property?

As noted above it is the responsibility of the buyer to be satisfied of the condition of the property. Generally there will also be an express term in the contract for sale confirming that the buyer has not relied on any representation as to the property other than what has been disclosed in the contract. Despite this the Conveyancing Act provides that in every contract for sale of residential land the vendor is taken to have given certain warranties.

Some of these warranties include:

– that the property is not subject to a heritage order

– that the land does not contain any part of a sewer

– that the council certificate is accurate and specifies the true status of the land

– that the land is not affected by any proposal for alignment, widening or levelling by a government authority (such as Roads and Maritime Services)

– That there is no matter which would justify the making of a demolition or upgrading order as to any structure or building on the land.

These warranties are subject to the information being disclosed in the contract, for instance the vendor’s warranty as to a sewer does not relate to the sewer which is set out in the sewer diagram set out in the contract. If the vendor breaches these warranties then the purchaser has the right to rescind (‘pull out’) of the contract upon certain conditions being met as set out in the legislation.

What should I do to discover problems?

Each property is different both in terms of the quality and condition of the buildings and the restrictions and notations on the title. Prime Lawyers will advise you of the searches and enquiries which can be obtained to minimise the risks associated with buying a property, although ultimately the decision is yours. Some of the steps which can (and should in many instances) be taken are as follows:

– Pest and Building reports to ascertain the condition of the buildings

– Strata report- in circumstances where the property being purchased is part of a Strata Scheme (such as an apartment / unit complex)

– Survey to ascertain the exact boundary of the land and the location of the structures on and surrounding same

– Building certificates to ensure there will be no demolition or upgrading orders concerning the structures on the land

– Government enquiries as to road widening, levelling or other proposals which may affect the land

– Title insurance to protect from fraud and forgery and some of the above mentioned listed risks.

Prime Lawyers have a team of trusted inspectors, surveyors and consultants that are happy to assist our clients obtain the appropriate reports, and at short notice. We will ensure the costs and benefits of each are explained and a comprehensive advice is given as to the terms of the contract for sale, and documents attached to same.

If you are about to buy a property or have negotiated the purchase then get in touch with our team by contacting your nearest office. If you would like to obtain a no obligation quote then complete the form on our conveyancing website here.

We have property and conveyancing lawyers located at Sydney, Parramatta, Sutherland and Wollongong.