Material Fact

Brian Cannan: Today I'm here with Greg Jemmeson from Jemmeson Fisher Solicitors and Accountants. Good morning Greg.

Greg Jemmeson: Good morning Brian.

Brian: Well we're going to talk about the subject that's a little bit difficult to talk about and it's hard to put your finger on but material fact. What is a Material Fact?

Greg: Okay Brian, a Material Fact is a matter that affects the property okay it can be something that a reasonable search cannot find, like you go to the council and find out if there's building approvals you can find out if there's road widening, but there's no register you can go to, to find out whether there's been a serious crime committed at the property or whether somebody's passed away at the property. Now a material fact affects different people the only real precedent we have in New South Wales is the Gonzalez case from the tribunal many years ago but that's not a binding precedent that's only a guide and what the tribunal said there was that it's what would a reasonable person expect to be disclosed to them and it has to be something that cannot be found in some other general register. A natural death somebody passing around a property is not generally a material fact it's something that doesn't stigmatize the property. However if a prospective purchaser asked a question saying "Has anybody died in the property?" then it's a material fact for them. So what has to happen is the agent has to answer the questions of each prospective purchaser as to what is material to them. Now at the moment we're a little bit of a bind because there's no definition of what a material fact is in the Property Stock and Business Agents Act. I recently had a meeting with Fair Trading in respect to the reforms around the property industry and they've assured me that they're looking at putting a clear definition into the new legislation which is fantastic for the agents.

Brian: And will help all of us. So let's go through some of the questions that we get about about material fact. If I have a certain community that I deal with all the time and I know that a natural death would make them not want to buy the property, would I need to disclose that or would they have to ask me?

Greg: Now in those circumstances if you know the parties you're dealing with but that is something that is relevant to them then a reasonable person would expect you to disclose that to them I suppose one of the things the only thing we have other than the Gonzalez case is that what we can use as a guide for the agents as to what the general public look at that would be a material fact is some of the things that are set out in the Residential Tenancies Act in the regulations and in those circumstances...

Brian: To use it as a guide....

Greg: It's only a guide, so when you have a new tenant coming into a property there has to be a disclosure form filled out to them and that has to include whether the property's been subject to flooding in the last five years whether it's affected by loose fill asbestos and on the loose fill asbestos register some of the other things include whether there's any significant health and safety issues and I suppose one of those off the top of my head might be to previously been a meth lab or something like that and also whether the property had been the scene of a serious crime in the last five years now that's putting a five-year cap on it.

Brian: Yes, I want to go there, does that help salespeople?

Greg: No it doesn't because again it comes back down to this is for the Residential Tenancies Act it's only a guide for you to take into consideration.

Brian: With some other questions we get if I know if I know that there's a sex offender living in the street is that a material fact.

Greg: It's an interesting one and then it can raise issues of privacy does again does it affect that property and is that matter raised it's it's a very vexed question and honestly nobody has the true answer to it.

Brian: The next door neighbour has applied the council to put a second story on and the DA is not approved yet?

Greg: Again somebody is in the house and looks out the window and said what fabulous views and you as an agent know that there is an intention for the person next door to put on a second story and that's a material fact there's actually a number of old Australian Consumer Law cases on this very point that soon as a person raises an issue about the property such as the view it becomes a material fact.

Brian: So what you're saying is is that each circumstance is different and we won't call it grey but it's difficult but what what the Fair Trading wants you to be is open and honest at all times.

Greg: Of course, and it is again it's taking your what is important to your prospective purchaser and if that purchaser raises a specific issue then that is material to them and if you have any knowledge of it you then have to disclose it to them.

Brian: Well I hope that helps all the agents today Greg. Thank you very much.