When preparing to sell a property, it’s natural to focus on presentation, choosing a real estate agent and setting an asking price. However, ensuring the legal requirements are addressed before your property goes to market is just as important.
In NSW, sellers have specific disclosure obligations. Certain documents must be included in the contract for sale, and legislation also provides for warranties relating to the property. Understanding these requirements and addressing potential issues early can help reduce the risk of delays or complications during the sale. So, what do you actually need to disclose when selling property in NSW?
What are the disclosure requirements when selling property in NSW?
NSW has a statutory vendor disclosure regime under the Conveyancing Act 1919 and the Conveyancing (Sale of Land) Regulation 2022. Broadly, this requires the seller to provide prescribed information about the property through the contract for sale.
Certain documents must be attached to the contract, and particular warranties are taken to form part of the contract. The exact requirements can vary depending on the property. For example, additional requirements can apply to properties with swimming pools and to off-the-plan sales. This is one reason why preparing the contract should be one of the first steps when you are getting ready to sell.
You need a contract before advertising a residential property
In NSW, residential property generally cannot be offered for sale until a contract for sale has been prepared and made available. The contract should be prepared by an Australian legal practitioner or licensed conveyancer. This means it is worth speaking with your property lawyer before you’re ready for the first open home.
Your lawyer will need information about the property and may also need time to obtain documents from council, NSW Land Registry Services and other authorities before the contract is ready. Getting started early can make the process much smoother when you’re ready to put the property on the market.
Watch The Property Brief
In this episode of The Property Brief, Southern Waters Legal’s Stephanie Martyn and Mario Ferraro discuss what sellers need to know about disclosure obligations in NSW and why preparing a contract for sale early is an important part of the selling process.
What documents need to be included in the contract?
The documents required will depend on the property, but for a typical NSW sale the prescribed documents can include information such as:
- A current title search;
- The registered plan relating to the property;
- Copies of relevant dealings recorded on the title, such as certain easements, restrictions on the use of land and positive covenants;
- A current planning certificate issued by the local council;
- A sewerage or drainage diagram where applicable; and
- Other prescribed notices or documents required for the particular property.
These documents can reveal important information to a prospective buyer about the legal title, planning controls and interests affecting the property. There are also additional requirements for particular types of property.
What are vendor warranties?
Disclosure isn’t limited to attaching documents to the contract. NSW legislation also provides for certain warranties that are taken to be included in a contract for sale. These prescribed warranties address particular matters relating to the property at the date of the contract. For example, subject to the legislation and information disclosed in the contract, the prescribed warranties deal with matters including certain adverse interests, council or other authority proposals affecting the land, compliance with the Environmental Planning and Assessment Act 1979 in relation to structures on the land, and whether the land is subject to an annual charge for certain types of infrastructure.
The legal effect of these warranties can be significant. This is why it is important to inform your property lawyer about anything unusual affecting the property when the contract is being prepared. Your property lawyer can determine whether and how a particular matter should be addressed in the contract.
What about easements, covenants and restrictions?
These are common examples of matters that can affect property and may appear on the title. An easement can give another person or authority particular rights over part of the land. A common example is an easement for services or access. A restriction on the use of land can limit what an owner is permitted to do with the property.
A positive covenant can require the landowner to take certain actions in relation to the property. Relevant registered dealings are generally included with the contract so that prospective buyers can see the interests affecting the land. Your property lawyer can obtain and review the title documents when preparing the contract and advise you if anything requires particular attention.
What if work has been done to the property?
If you have renovated, extended or made other substantial alterations to the property, inform your lawyer when they’re preparing the contract. Issues can arise where building work was undertaken without required approvals or where the property’s current structures do not correspond with relevant approvals. This does not necessarily mean you can’t sell the property. However, it may affect how the contract should be prepared and what information needs to be obtained or disclosed.
If you are unsure whether previous work was approved, particularly work completed before you owned the property, raise it early. Your lawyer can advise you about what further enquiries may be appropriate.
What if the property has a swimming pool or spa?
Properties with swimming or spa pools can have additional contract requirements. For many properties, the contract must include one of the prescribed documents relating to pool compliance. Depending on the circumstances, this may be:
- A valid certificate of compliance;
- A relevant occupation certificate together with evidence that the pool is registered; or
- A certificate of non-compliance.
Different rules and exemptions can apply to certain strata and community scheme properties. If you have a swimming pool or spa, let your lawyer know when you first instruct them so the appropriate documentation can be addressed before the property is marketed.
What if you are selling a strata property?
Strata properties involve additional documentation and considerations. The contract will generally include relevant strata information, including the strata plan, and buyers may undertake their own inspection of the owners corporation’s records before purchasing. Those records can contain information about matters such as finances, levies, building defects, insurance, planned works, disputes and minutes of meetings.
If you’re aware of an issue affecting the strata scheme, tell your property lawyer or conveyancer. They can advise you about whether it affects the sale or contract and how it should be dealt with.
Do you have to disclose building and pest reports?
There is an important distinction here between the seller’s obligations and the selling agent’s obligations.
A seller is not generally required to commission a building or pest report simply in order to sell the property. NSW property agents, however, have specific record-keeping and disclosure obligations regarding certain pre-purchase inspection reports they know about. For example, if an agent is aware of a building, pest or relevant strata inspection report and a prospective buyer requests a copy of the contract for sale, the agent may be required to disclose prescribed information about that report. This is another reason why sellers should keep their agent and legal representative properly informed during the sale process.
What happens if required documents aren’t included?
Failing to comply with the statutory disclosure requirements can have serious consequences. If certain prescribed documents aren’t attached to the contract before it is signed, the purchaser may have a right to rescind the contract within the period provided by the legislation.
Issues can also arise if a prescribed warranty is breached and the statutory requirements for a purchaser’s remedy are satisfied. The available rights and remedies depend on the particular breach and circumstances, so this is not an area where sellers should rely on assumptions. Preparing the contract correctly from the outset can help reduce the risk of disclosure issues arising after contracts are exchanged. For more information about what happens once a buyer is found, read our guide to exchanging contracts when selling property in NSW.
Should you disclose an issue even if you’re not sure whether it’s required?
If you are aware of something unusual about your property, the safest practical approach is to inform your lawyer. Not every issue is required to be inserted into the contract or communicated to a buyer in the same way. Your property lawyer or conveyancer can determine whether the matter is legally relevant, whether further enquiries are needed and whether it should be addressed through the contract.
Examples worth raising with your lawyer can include:
- Building work or renovations;
- Disputes involving boundaries or neighbouring properties;
- Easements or access arrangements;
- Notices received from council or another authority;
- Swimming pool compliance issues;
- Tenancy arrangements;
- Known strata issues;
- Unregistered arrangements affecting the property; or
- Anything else you think a buyer might raise during their due diligence.
Providing this information early allows your property lawyer to address potential issues before they disrupt the transaction.
When should you speak to a property lawyer?
Ideally, before the property is advertised for sale. Preparing a contract can involve obtaining title searches, council certificates, drainage information and other documents. Some of these won’t be available instantly. There may also be identification and verification requirements when engaging a property lawyer. Learn more about what the new AML/CTF laws mean for property buyers and sellers.
Involving your property lawyer early can help identify and address potential issues before a buyer is ready to exchange contracts. This can make the sale process more efficient and reduce the risk of unexpected issues arising at the last minute.
Preparing to sell property in NSW?
Selling a property involves more than finding a buyer. A properly prepared contract helps ensure the required information is available from the outset and allows you to deal with legal issues before they become obstacles to the sale. At Southern Waters Legal, our Property Law team can assist with preparing your contract for sale, advising on disclosure requirements and guiding you through the transaction from getting your property ready for market through to settlement.
Preparing to sell your property? Contact Southern Waters Legal’s Property Law team to arrange your contract for sale and address any disclosure requirements before your property goes to market.
This article provides general information only and does not constitute legal advice. Disclosure requirements and contractual obligations depend on the property and circumstances of the particular transaction.
