You've probably heard of the Latin term Caveat Emptor or "buyer beware"... but what exactly does it mean and how does it affect you?
According to Cornell University Law School, it’s “a doctrine that often places on buyers the burden to reasonably examine property before purchase and take responsibility for its condition, especially applicable to items that are not covered under a strict warranty.” It has been consistently applied in the property industry right across Australia.
Ultimately, because the responsibility of your property decisions is yours, caveat emptor is not to be taken lightly. However, there may be exemptions to caveat emptor e.g. where the vendor, or agent acting on their behalf has acted in a misleading or false manner. According to the International Bar Association and J. Duke of Property Observer, this includes "express or implied statements that created a false impression about a property’s characteristics, a vendor knowingly disguising or concealing a physical defect in order to mislead and where a known latent defect, flaw, fault or imperfection is not readily observable or discoverable through the exercise of ordinary care. In these situations, a buyer may be able to seek a refund of their deposit and to rescind the contract of sale".
According to the Commercial and Property Law Research Centre at the Queensland University of Technology, under this common law, "a seller is only obliged to disclose latent defects in the seller's title (e.g. interests registered on the title such as encumbrances, leases and easements). But is not obliged to disclose defects in the quality of the title (such as land restrictions or contamination issues). Nor is the seller obliged to provide a warranty as to the fitness of their property for the purpose for which it was purchased".
This means that, as a purchaser, you must make your own investigations of the property you are considering buying to detect any building defects before settlement because there may be little recourse for compensation for defects discovered after your purchase. And you could end up with a property worth less than you paid for it.
That's why having a building and pest inspection conducted is critical in assisting you to make a sensible assessment of the risks associated with the most significant purchase of your life. Ultimately, your property decision and risk responsibility is yours alone. As this is for your information only and does not constitute legal advice, before signing any contract you are always advised to consult your solicitor.