Buying property is one of the biggest financial decisions most people will ever make — yet in New South Wales, the law places the burden of discovery squarely on the buyer’s shoulders.
The principle of caveat emptor — Latin for “buyer beware” — means that when you purchase a property, you do so at your own risk. It is your responsibility to investigate the property thoroughly and satisfy yourself that it is what you expect before the contract becomes binding. While modern legislation has softened some of its sharper edges, caveat emptor remains a cornerstone of Australian property law.
What Sellers Must Disclose
Sellers are not left entirely to their own devices when it comes to disclosure. Under the Conveyancing Act 1919 (NSW), a vendor must attach certain prescribed documents to every residential contract for sale. These include a title search, details of any registered interests affecting the land, a zoning certificate issued by the local council, and a sewer diagram.
Beyond the contract documents, both vendors and their agents are prohibited from engaging in misleading or deceptive conduct under the Australian Consumer Law and the Property and Stock Agents Act 2002 (NSW). This includes an obligation to disclose material facts — information that would likely influence the decision of a reasonable purchaser.
Under the Property and Stock Agents Regulation 2022, prescribed material facts include:
- Flooding or bushfire affecting the property within the last five years
- Significant health or safety risks
- Loose-fill asbestos insulation listed on the relevant register
- A crime of murder or manslaughter at the property within the last five years
- Use of the property for the manufacture, cultivation or supply of prohibited drugs or plants within the last two years
- External combustible cladding subject to a fire safety order or rectification application
Agents who fail to disclose a prescribed material fact face penalties of up to $22,000.
Stigmatised Properties: A Grey Area
Some properties carry a history that leaves no physical trace but can weigh heavily on a buyer’s mind — notorious past occupants, a dark criminal history, or events that linger in local memory. These so-called “stigmatised” properties present a genuine grey area in NSW law.
There is no express legislative requirement to disclose psychological stigma. A prior death at a property may be entirely irrelevant to one buyer and a deal-breaker for another. NSW courts and tribunals have, however, shown a willingness to treat reputational history as a material fact in certain circumstances — particularly where an agent was aware of notorious events and said nothing. The safest approach for buyers is not to assume that silence means a clean slate.
What Buyers Should Do
Not everything that matters will be handed to you in a contract. A proactive buyer is a protected buyer. Before you sign anything, consider taking the following steps:
Ask questions. Enquire directly about the property’s history — including flooding, past use, and any events that may have occurred on the site. An agent is legally required to answer honestly.
Commission independent reports. Building and pest inspections can uncover structural issues and infestations that are invisible at an open home. For strata properties, a strata report can reveal ongoing disputes, upcoming levies, or building defects. Surveys can confirm whether fences, structures, and boundaries are where they should be.
Make government enquiries. Planning certificates, heritage listings, road widening proposals, and environmental overlays can all affect how you use — and enjoy — a property.
Consider title insurance. This can provide a financial safety net against certain title defects and encumbrances that searches may not reveal.
Engage a property lawyer before you sign. Contract review is not a formality. An experienced property lawyer will identify risks, negotiate special conditions, and ensure that every relevant search has been carried out before you are committed.
Purchasing property involves significant legal and financial risk. If you are planning to buy, contact our Land, Home + Water team (Wayne Riggien wayne@morganenglish.com.au) for tailored advice before you sign.
