Preface
Being in the following environment: You have just bought a house and have moved in. In a friendly chat with your neighbors, you found that the property was a serious crime scene or used to manufacture some chemicals. How will you react?
If you know some background about the property, will you still buy the property? Is the real estate agent or seller obligated to inform you? In most cases, the answer is “no”. However, amendments to the Victorian Land Sale Act 1962 expanded the matters that must be disclosed to the purchaser before the sale, including places where serious crimes occurred. Tenants who discover that they have entered a stigmatized property must resort to the consumer protection laws discussed below.
Why is the law needed?
The old doctrine of buyer conceit-please beware of buyers, it still affects real estate transactions. This means that the buyer is responsible for inquiring about the property on his own. Property inspections are usually limited to the actual condition of the property. Although it is possible, at least in theory, to arrange for a person to investigate their “background”, this can be a difficult process, especially if such information is withheld or difficult to obtain.
As a result, each state and region has enacted laws that require a certain level of disclosure to the buyer during the transaction. The degree of disclosure required and the nature of the matters that must be disclosed vary from jurisdiction to jurisdiction. In addition, Article 18 of the Australian Consumer Law considers that its behavior is misleading or deceptive when the matter is not disclosed but there are reasonable expectations under certain circumstances.
The problem is that although disclosure may be required in matters such as structural failures or road expansion, such information is limited to actual issues affecting property. But what happens if the matter does not involve physical defects, but psychological or stigmatizing defects such as murder?
Focusing on the impact of stigma on property is not a recent phenomenon. The courts in many jurisdictions, including Australia, have had to contend with the buyers. They found that the property was the scene of serious crimes or criminal activities, indecent incidents had occurred, and someone suffered from certain diseases or The sex offender lives nearby. In one case, a young man murdered his parents and sister at his home in Sydney. The property was later sold to a young couple. After discovering the tragic incident in the house, they sought to withdraw from the auction for religious reasons.
Real estate agents have received much criticism for failing to notify buyers of what happened there. After huge public pressure and an investigation by the New South Wales Fair Trade Office, the contract was revoked. More ethereal is that there have been a series of cases in the United States, in some cases, buyers have sought to withdraw sales (in some cases successful) because of the house’s (allegedly) haunted or supernatural activities.
Disclosure laws on stigma
Victoria’s legislation clarifies the obligation of real estate agents and sellers to disclose “material facts”.
In short, the real estate agent or the seller cannot knowingly conceal any material facts about the property when selling the land. This legislation is supported by guidelines that clarify the nature of the substantive facts. This includes situations where the property is a serious crime scene or an event that may pose a long-term potential risk to the health and safety of the land user during the current or previous occupation. Specific examples include extreme violence such as homicide, the use of property to manufacture substances such as methamphetamine, or the use of dangerous materials in national defense or fire training grounds. Relevant factors may include the reaction of other potential buyers to this fact, including their willingness to purchase based on this disclosed information.
Suppliers and real estate agents who do not comply with the regulations will be punished severely and even go to jail.
Will the law be effective?
As with any new regulations, we will have to wait and see. However, some preliminary comments can be made. First of all, what is interesting is how to understand the term “knowingly”. If the agent or supplier only suspects the problem without further research, can these regulations be avoided? Think of the term “wild blindness”. Second, facts can be substances in a general sense or a specific sense. It seems simple in a general sense, because it refers to information that most people consider when deciding whether to buy a property.
But how serious is the crime? What if the situation involves the cultivation of hemp instead of a worse substance? To complicate matters more, important facts may be important to a specific buyer, but not important to the general buyer. For example, in the above situation, the buyer’s religious beliefs prevented them from living in a house where a violent murder occurred. In this case, it seems that potential buyers have a responsibility to raise questions about their concerns.
Although there are doubts that buyers of alleged haunted houses may not be successful under this law, the law resolves a major gap in psychological considerations in purchasing property rather than traditional tangible property.
