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Patrick H.
Patrick H., Lawyer
Category: Australia Law
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Experience:  Dip Law LPAB - Sydney based lawyer
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Hi There, I am going to an auction on the weekend. The house

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Hi There,

I am going to an auction on the weekend. The house is being sold by the government as the owner brutallymurdered his wife in the house in 2011. The house has remained abandoned since as the owner/murderer was acquitted due to mental illness and he also owned the home. In the sellers description they note that "Buyers need to read 'Provision 43' in the contract".

Provision 43 in the Contract States -

The purchaser acknowledges that he/she/it is aware that a former occupant of the property died whilst residing in the property and that the death occurred in the unusual circumstances. The unusual circumstances were that the occupant was murdered. The purchaser shall rely on his/her/its own enquiries and shall not be entitled to make any objection, requisition,claim for compensation, delay settlement or rescind the contract in respect of same.

I need to know the following -

1. If I purchase the house do I need to disclose that a murder occurred in the house when I resell the property? If I do have to disclose this, does the new owner then have to disclose this to the next person they sell it to? In other words have far down the buying/selling road do you need to add in Section 43?

2. If I purchase the property and decide to rent it out, do I need to disclose to the person who is renting that there has been a murder in the house? If yes, how long does this stick with the rental of the property.

3. If I purchase the property and decide to rent it out as a holiday rental, do I need to disclose to the person who is renting that there has been a murder in the house? Even thought they may only be renting for 2 nights, again if yes, how long does this stick with the rental of the property.

4. My goal is to flip the house, the auction is this Saturday, as the market on the central coast is stagnate, I have the option to rent it out. I need to know what are my the legal obligations for me to disclose the murder to future buyers/renters. How soon can I drop section 43?
Hello and thank you for your question.

The answer to all your question is that there is settled or strict law which requires disclosure of the murder of a prior occupant at the house and the reason that clause 43 appears in the contract is simply a precautionary one.

What the law requires however is that any material fact which could reasonably be expected to influence a buyer (or renter) should be disclosed. Previous cases where a purchaser has attempted to rescind a contract because of the failure to disclose a prior murder have failed on the basis that it was not a reasonable reason for someone not to carry through with a purchase, however agents who have failed to disclose such information have been fined and each case turns on its merits. In short because there is very little previous history of such cases in the face of the modern legislative framework, it is not possible to say with certainty how such cases will be decided in future.

It follows that if you buy this property and fail to disclose the prior murder it is possible a future owner could attempt to rescind the contract at some point in the future, and or seek compensation and although they would face difficulties, it is not impossible that the court would find in their favour.

Accordingly, the prudent legal approach is that you should continue to disclose the background of the property indefinitely. That said, be aware that whilst many people may find it a big negative for the property some may in fact find it an attractive idea because of the notoriety and interest which attaches to such a history in the property's background (much like a property owned by someone famous may attract buyers even if they were famous for a negative reason).

The following website has some information on this issue which may further assist your understanding:

http://www.adamslawyers.com.au/Publication-1027-Death-and-Disclosure---houses-with-a-history.aspx

I trust the above assists.

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Thank you and good luck.

Patrick



Customer: replied 3 years ago.

Thanks for your reply, so basically its up to me. For example if I were to holiday let the place, there would be no reason to disclose as they are there for a week tops and the expense would be no more then $5K.


 


If I rented it out for a year at $50K, again I would chance only the fact that the tenants may move out and break the rental agreement.


 


The biggie is reselling. However if I used I real estate agent who was not local and in all good faith was not aware of the history, then the chances of the new buyer suing me if they found out by the locals would be diminished.


 


You see I survived the Bali Bombing in 2002 and witnesed dozens of people burn to death. In fact 202 people were "murdered", so having one person murdered in a home makes the chances of another murder seem like a long shot....its also justifies my perception that disclosing this to anyone is not a big deal, as far as I am concerned...


 


 


 

Yes it is essentially a judgment call for you as to the risks of at tenant or purchaser complaining about the non disclosure or not.

As you say for a rental situation the risk would generally just be that they would use it as a justification for breaking the lease early, but for a purchaser it may mean they would try to rescind the contract, even many months or potentially years after they bought it (though the longer they held the property the less likely a court would accept that it was a genuine reason for wanting to rescind).

Using a real estate agent who is not local would not assist (though it may help the agent avoid fines) since the obligation to disclose is the owners (the agent's obligation is an additional professional obligation and does not diminish the vendor's obligation to disclose material facts).

Personally I don't think most reasonable people are superstitious about such things, but no doubt some people will take a different view and the safest legal course is simply to disclose it.

I trust the above assists.

Please rate my answer so I can be paid by the website operator.

Please note I am only paid if you rate me with three or more stars/smileys.

Thank you and good luck.

Patrick
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