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  • First National Real Estate

Failure to disclose nasty neighbour leads to half-million-dollar property dispute


  • The WA Supreme Court has ruled a buyer had the right to cancel a property purchase due to the presence of a particularly nasty and belligerent neighbour

  • The home seller failed to disclose that a neighbour’s conduct had the potential to materially affect the buyer’s use or enjoyment of a property in a strata scheme

  • The buyer rescinded her contract and has sought compensation in the order of $525,627

First National Real Estate chief executive, Ray Ellis, has reminded property buyers throughout Australia about the critical importance a Strata Inspection Report can play in the process of due diligence when purchasing a Strata apartment.

According to the industry leader, it’s like the equivalent of a pest and building inspection when buying a house, and it could have helped a young Western Australia woman avoid the legal dispute that has led to a compensation claim now exceeding $500,000.

‘The purchase of a Strata Inspection Report is a fundamental part of your due diligence when buying into any Strata, Community Title or Company Title building,’ says Ray Ellis. ‘Such reports reveal all manner of material facts about the building you are considering. Buyers can expect to see minutes of Owners’ Corporation meetings, where disputes between neighbours are likely to be discussed, as well as other concerns like building defects, drainage problems or upcoming special levies.’

The WA Supreme Court’s finding that a buyer was entitled to rescind the contract on her purchase of a $390,000 unit hinged on the seller’s failure to disclose that a particularly nasty and belligerent neighbour lived upstairs. She only became aware of his unacceptable behaviour when tradespeople doing renovations reported being abused before she moved in. Her further enquiries then revealed a long history of well-known problems within the Strata complex.

The situation highlights the critical importance of proper due diligence when buying real estate, but also serves as a reminder about how carefully home sellers should consider their obligations to disclose anything a reasonable purchaser might want to know, according to Mr Ellis.

‘Real estate agents have a duty to disclose any material fact they believe a purchaser might want to know, but agents can’t always be sure a homeowner has told them everything they should know about a property.

‘Homeowners, as the WA case reveals, might withhold information detrimental to the value of their property, but they do so at substantial risk. In this case, a simple $250 report might have helped the buyer avoid the neighbour’s irrational and unacceptable behaviour ruining her dream home, and the home seller the loss of their sale plus a half million dollar plus compensation claim.’

Currently, the WA Supreme Court has found the buyer was within her rights to rescind her contract to purchase the property. However, the Court has been unable to determine the fair value of the property, had the conduct of the neighbour been taken into account at the time of purchase. The legal saga therefore has potentially much further to run before reaching a resolution.

‘The moral of the story is clear,’ says Mr Ellis.

‘If you’re buying an apartment or a house, always get a Strata Inspection Report as well as a building and pest inspection, and with houses, always knock on doors and talk to neighbours before buying into the neighbourhood.

‘And for homeowners, think twice before withholding information that you know has the potential to affect your purchaser’s enjoyment of your property seriously. If you don’t, you may well find that your sale falls apart, years into the future.’

Issued by: First National Real Estate

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