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Disclosure for sellers

Sellers  |  24 February 2020  | By the team at settled.govt.nz

Agent With Sign2

Do I have to tell prospective buyers (and my real estate agent) about problems with my house?

When you're selling a property, honesty is the best policy. You need to share all relevant information – including issues, for example, water-tightness issues, boundary issues and unconsented alterations. 

Put yourself in the shoes of the buyer - what would you want to know? If you don't disclose serious issues, you could face legal action further down the track.

Seek legal advice before signing an agency agreement

When you’re ready to sell your property, it’s a good idea to get legal advice about your obligations before you sign an agency agreement. Most of these agreements, which set out the terms and conditions of your contract with the real estate agent, ask you to confirm that there are no undisclosed defects in the property that you are aware of and that you haven’t withheld any information about it.

Disclose any outstanding consents

As a seller, you must also confirm that your property has all the necessary consents and code compliance certificates for any building work. If you’ve given consent to any works at a neighbour’s property, the buyer needs to know. The correct approach is to disclose outstanding consents to the agent or the buyer if you’re selling privately.

Be open and honest  with your agent

If you know there are issues with your place; it’s best to discuss the problems with your real estate agent (or directly with buyers if you're selling privately). This applies if it’s something small like a garage door not working or a more significant problem like an unconsented deck. Your agent can help you decide how to manage the problem by either fixing it or disclosing it to potential buyers. It's important to be open and honest throughout the process to reduce the chances of the sale falling through and the risk of legal action after settlement.

Understand agents' obligations

Under the Real Estate Agents Act 2008, if licensed real estate agents suspect that a property may have a hidden or underlying defect, they must ask the seller about it or advise potential buyers about any risks. For example, if a property is next-door to a proposed new development, or if it’s in an area that’s been subject to flooding, the agent must tell prospective buyers rather than turning a blind eye. If your property may be prone to weather-tightness issues due to its age or cladding, then the agent should disclose this potential risk to prospective buyers.

You must give permission before an agent can disclose any defects

A real estate agent must not disclose any problems with your property to buyers without your permission. If you don't agree to the agent disclosing important information, the agent is required to stop working for you.

The same principles apply to private sales

If you have decided to try to sell your property yourself, you are still required to disclose any issues. Don’t risk getting dragged through the courts over an issue you haven’t disclosed. If you’re not prepared to fix the problem, make sure buyers are going into the sale fully informed. 

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