Article originally published on JUNE 23, 2003 – Reviewed and approved.
By Neil Jenman
In the movie Lethal Weapon 3, there’s a delightful scene where a real estate agent is showing some starry-eyed buyers through a home owned by one of the trouble-attracting heroes. Everything is going well until the agent reveals that the bathroom was remodelled “due to unexpected bomb damage” and a picture window was replaced after a shoot-out. The buyers flee.
When the owner protests, the agent shrugs and says: “I have to tell the buyers these things. It’s the law. It’s called FULL DISCLOSURE.”
Full disclosure laws apply in several states in America and throughout the world. But not so in most parts of Australia.
In Western Australia, politician Tony Dean MLA, has made what he calls his “highest order request” since he became the Member for Bunbury in 2001.
In a letter to John Kobelke, the Minister for Consumer Protection, Dean cites a case of a homebuyer who paid $477 for a full building inspection report on a home. Based on this report, the buyer bought the home believing it was in good condition.
After he bought the home, the buyer discovered that both the plumbing and the electrical wiring was illegal. An official order has now been issued requiring repairs which will cost around $7,000.
When the buyer complained, he discovered he had become what Tony Dean called “a victim of systematic lies and deceit based on a system of building inspection, which, in my opinion, is a hundred years out of date.” Wherever he went the homebuyer was told that nothing that could be done to help him.
Tony Dean believes what happened to this homebuyer is not an isolated case. He says it may be the “tip of the iceberg” where thousands of buyers are in urgent need of better laws to protect themselves against building inspectors, they are supposedly paying to protect them.
It’s terrible to buy a home and then discover there’s serious faults with it. But it’s worse to pay for a building report which says a home is in sound condition and then to discover, after you buy, that the home needs major repairs. If, after all this trauma, you then find the laws are inadequate or the authorities won’t act to protect you, the dream of home ownership can become a real nightmare.
Checking out a home before you buy is one of the essential rules of safe home-buying. A competent and trustworthy building inspection report is vital. But in the frantic rush to buy a home these days – and with salespeople urging you to hurry up or miss out, the risk of missing out on basic safety is higher than ever.
Queensland real estate watchdog and solicitor Tim O’Dwyer, believes full disclosure should be a basic right for homebuyers. He has long called for legislation that requires all homes to be sold with a “Home Worthy Certificate” which sets out all faults of a home. Just like a road-worthy certificate for a car.
O’Dwyer refers to this as “truth in selling”. However, he claims agents don’t want anything that slows down the buying process or places their commissions at risk. “The very idea of a Home Worthy Certificate scares agents,” he says. O’Dwyer believes such certificates should include “all available searches (which buyers normally arrange at their own expense), title and easement details, flood details, council records (particularly of approvals and inspections), rates and body corporate details, appliance guarantees, and anything else that the buyers ought to know about. After all, to most of them, it’s the largest financial purchase of their lives.”
In the absence of effective new legislation or effective action under existing legislation, the main protection for buyers seems to be the old Latin rule – Caveat Emptor: Buyer Beware.
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