Selling property? Here’s what you need to know about disclosure obligations
When selling property in Victoria, what you don’t tell a prospective buyer can be just as important as what you do. The law imposes serious obligations on vendors and agents to be transparent about material facts, and getting it wrong can mean hefty fines or even jail time.
A recent Victorian case has shed new light on how these disclosure rules actually work in practice.
What the law prescribes
Section 12(d) of the Sale of Land Act 1962 (Vic) (Sale of Land Act) provides a significant safeguard for consumer protection in Victorian real property transactions. Its objective is to prevent misleading or deceptive conduct in land sales by making it an offence for a vendor or agent to knowingly conceal material facts about a property with the intention of inducing a person to purchase the land.
In summary, a vendor could be found to be in breach of section 12(d) if they have:
- knowingly concealed a material fact, or
- recklessly made a misleading statement.
The penalty for breaching section 12(d) is significant and can include up to:
- 120 penalty units (approximately $24,400), or
- 12 months’ imprisonment.
Consumer Affairs Victoria has published guidelines on what constitutes a material fact, together with example scenarios, but how is the section actually applied in practice?
The Court’s interpretation
The recent decision in Sonja Anne Nota & Anor v Karlovy Group Ptd Ltd & Anor [2025] VCC 1132 provided some guidance on section 12(d)’s application.
In this case, the purchaser tried to rescind a contract of sale of land, claiming the vendor failed to disclose a tree removal permit. However, the vendor rejected this rescission on the basis that the tree permit had expired and had been superseded by the development permit.
The purchaser submitted that section 12 imposed a positive obligation to disclose the permit, in a similar fashion to sections 32C and 32D of the Sale Of Land Act. The Court disagreed, ruling that since those sections already impose that obligation, the only reasonable conclusion is that section 12 serves a different purpose of enforcing a serious criminal penalty on any person who engages in a conduct with intention to induce another to purchase land.
It was held that for section 12(d) to apply, the vendor must have:
- knowingly concealed a material fact, or
- recklessly made a misleading statement.
The Court emphasised that intent or recklessness is central to liability under section 12(d).
The Court ruled that failure to disclose the tree removal permit did not constitute a material fact as it did not affect the land at the time the contract was entered into. Further, the vendors were held to have a genuine belief that the permit had expired, therefore could not have been held to intentionally or recklessly withhold that fact.
What vendors must consider
This case emphasises and highlights section 12(d)’s operation as a strictly penal provision. It serves as a reminder that vendors should:
- consider all facts known to them that may affect a prospective purchaser’s intent to purchase a property
- disclose material facts to their agents or legal representatives before marketing the property and respond honestly to purchaser questions.
Being proactive will help to ensure compliance and avoid legal penalties.
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