One of the most difficult decisions a licensee can face is whether or not to disclose a sensitive issue that doesn’t relate to the physical state of the property. Suicide and violent crime are examples of sensitive issues.
What you should consider
Whether or not to disclose a sensitive issue will depend on the facts of each case and what the vendor is comfortable disclosing.
If you’re aware of a sensitive issue, you should proceed cautiously and consider whether it’s something you need to disclose. A sensitive issue may be an unnatural death that occurred at the property but may also include other issues such as a violent crime.
You must consider each situation based on its facts, but other factors may be relevant such as:
- what happened, for example, murder or suicide
- the location of the event- sometimes it will be reasonable to view an event that occurred on the grounds of a property differently from one that occurred in the dwelling
- how long ago the event happened
- the circumstances following the event, for example, whether the dwelling continued to be lived in and, if so, for how long
- the circumstances of the event and whether it has a degree of local or wider notoriety
- the likely reaction of potential buyers and the possible impact on the price.
You can’t make a disclosure or share sensitive information without the vendor’s consent. You will need to discuss with the vendor any matters you believe should be disclosed and take their views into account.
Handle with care
If you decide to provide buyers with information about a sensitive matter and the vendor agrees, you should handle the matter with care and sensitivity. There is no need to advertise the information or tell everyone who views the property. You must tell buyers who have indicated an interest in submitting an offer on the property.
If you believe sensitive information should be shared with potential buyers but the vendor doesn’t, you may not disclose the information. You should discuss this with your agency and consider ceasing to act for the vendor. You may also seek legal advice if you have a concern about your client’s instructions potentially causing you to be in breach of your professional obligations.
If you need help with issues relating to the sharing of sensitive information, we encourage you to contact your manager or REA and discuss your options.
Guidance from a decision
This case involves a property that was sold where a tenant had committed suicide in the garage 12 months before the listing. The property was listed with two agencies. Agency One disclosed the suicide to prospective buyers. Agency Two, which sold the property, did not. The matter was considered by senior staff at Agency Two who concluded that, because it was a personal matter of the occupants and did not relate to the condition of the property, it did not need to be disclosed.
The property was purchased by the complainants who decided to sell it 5 months later and entered into a sale and purchase agreement. The complainants’ neighbour asked them if they were on-selling so quickly because of the suicide.
This was the first time the complainants had heard about the death at the property. The complainants disclosed the event to their purchasers who then didn’t want to move in so they on-sold the property before settlement.
The Complaints Assessment Committee (CAC) found unsatisfactory conduct against Agency Two, which was subsequently appealed to the High Court.
The High Court upheld the appeal and overturned the finding of unsatisfactory conduct.
Read the full decision here(external link).
Below are some of the key points from the decision and what it means for you.
Disclosing depends on the facts of each case
The Tribunal rejected the suggestion that agents should err on the side of caution and disclose. Whether it needs to be disclosed will depend on the facts of the case:
The reading in of such a rule is not appropriate or justifiable. An evaluation of what “should by…fairness” be provided to a client must be undertaken in the particular circumstances of each individual case. There is no presumption either way...
I accept this matter on which reasonable people can have different views. While some may be affected by it, others may be so to a lesser extent, or indeed, not at all.
Property has been occupied since the event took place
It was acknowledged that the issue was a finely balanced one on which people can have different views:
This is a very finely balanced decision. In favour of the appellant are the facts that the suicide took place in the garage over 12 months before the sale, and the property had been occupied during that 12-month period. Furthermore, there was no industry standard or guidance available to assist in the decision as to whether the suicide required disclosure.
As against that, one estate agency had decided that disclosure was required, although that is not determinative. More telling is the fact that the agency was unable to effect a sale. However, there could have been other reasons for that. The reaction of the second respondents and their purchasers provides evidence only after the event.
Because the issue was so finely balanced, it was concluded that it would be inappropriate to find a breach of the Code of Conduct rule 6.4:
Because the decision is so finely balanced and because there was no industry standard or guidance available, I conclude that it is inappropriate to find the appellant in breach of the rule.
What this means for you
The decision is only meant as general guidance rather than to provide hard rules. There needs to be the consideration for confidentiality and fairness to the vendor:
But suicide, although sadly relatively common, carries with it feelings of unease and is generally regarded with some disquiet amongst most cultures.
[A] particularly vicious crime which has considerable notoriety should... be disclosed if only because it would not be fair for a purchase for a purchase from outside the locality to be ignorant of such an event in contrast to those with local knowledge.
... the fact a natural death has occurred in a house would not require disclosure.
We recommend you seek advice about the effect of the Tribunal’s decision if this is a significant matter for you.