Caveat emptor is a legal principle which is Latin for “let the buyer beware”.

This article examines whether this principle still applies to property transactions.

Property transactions and caveat emptor

Many years ago a seller would prepare a contract and it would be up to the buyer to carry out such searches and enquiries as the buyer thought fit to determine whether there were any issues with the property. The seller’s input in this process would be minimal.

Nowadays, there is far greater emphasis on protection for the buyer. An example would be with the statutory disclosure requirements for off the plan contracts contained in the Land Sales Act 1984 and the Body Corporate and Community Management Act 1997.

Other examples would include the seller’s statutory obligations to disclose whether the land is contaminated and whether any of the improvements on the property have been carried out by the seller as an owner builder rather than by a professional builder.

In addition to the statutory requirements, there is the issue of misrepresentation. If a seller makes a statement in a contract that proves to be incorrect, then the seller may be liable to the buyer for misrepresentation.

Furthermore, if a seller knows of some defect with the property and fails to disclose that defect to the buyer then that failure to disclose the defect to the buyer can also be a form of misrepresentation.

On this basis, the seller’s silence can be damning.

Sellers need to be careful when entering into contracts that they have given full and frank disclosure to a buyer, be it fulfilling a statutory requirement as noted above or ensuring that there is no scope for a buyer to make a claim for misrepresentation.

To this extent, a seller who thinks that caveat emptor still applies and that it is up to the buyer to establish any defects with the property may find themselves being the defendant in expensive and time-consuming litigation.

Let the seller beware.

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This article was first published on the 30^th of April 2020. It was last updated on the 24^th of September 2022.

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This update is for your information and interest only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.