When buying a property, there is so much you don’t know. Was it once a drug lab? Has a murder occurred in the neighbourhood? Has someone died in the house?
Two words for you: Caveat emptor.
It’s Latin for “buyers beware,” a general principle for buying a house that roughly translates to “do your own research.” That didn’t happen in 2004 when an unknowing couple bought a Sydney house where three people were murdered just three years before.
But the agents that sold it were eventually fined for misleading behaviour under the consumer protection laws and refunded the couple’s $80k deposit.
“Clearly something like that needs to be disclosed to potential purchasers, not just if it happened yesterday,” said Adrian Kelly, President of the Real Estate Institute of Australia.
How much should be disclosed?
So what if a crime or murder occurred in a home 40 or 50 years ago? Does it still need to be disclosed if it’s been lost to history?
Some crimes are so horrific that the stigma lingers on for decades, so legislating a blanket disclosure period like “crimes that occurred within the last 10 years need to be disclosed,” for example, can be difficult.
Adrian Kelly says if it happened so long ago that nobody knows…
“What's the issue?” he asked.
“Natural deaths occur in houses all the time and we don’t disclose that because it's part of life, it gets grey when we start to talk about suicides…At what point does a suicide become something we disclose or not disclose?”
Mr Kelly says no matter what the circumstance, the buyer needs to be front of mind.
“If the issue with the property would cause the purchaser to not purchase, then that’s the thing we need to tell them about,” he said.
Different people care about different things. So at times agents may be unaware of certain factors that might cause a buyer to rethink.
For example, if the property was once an abattoir and the purchaser a staunch animal rights activist. In such a case, if a buyer cares enough about an issue, it’s up to them to ask the question.
Buyers beware still plays a part.
Material Facts: Murder and Meth Labs
Realistically though, who thinks to themselves when buying a house, I wonder if this house was a meth lab? I’d better ask.
Agents do need to disclose ‘material facts’ about a property, and what that includes varies from state to state.
Victoria has the most robust laws when it comes to “material facts” buyers should be told about. Last year, the state included structural defects and development proposals nearby... and the state made it an offence not to tell.
While a homicide needs to have occurred in the past five years, and a meth lab in the past two years.
So should all laws be made clearer, and more specific?
It’s impossible to be too prescriptive, according to Professor of Law Eileen Web from the University of South Australia.
“Someone might have a problem with a meth lab...but what if someone was dealing marijuana out their back door? Does that need to be disclosed? There will be questions of degree,” she said, speaking to the Victorian laws.
Dr Webb says there is a balance between agents disclosing and buyers asking the right questions. She says the best way to go about finding out if your house was once a crime scene is to do some homework.
“Engaging the neighbours, community centres, newspapers and so on,” she said.
How do crime scene houses go on the market?
Houses, where someone has been murdered, have been known to fall sharply in price. A that the value of houses nearby fell by nearly four per cent. But it found rental prices weren’t really affected. And after about a year or more, prices begin to return to normal.
Though it does depend on the crime…
Fifteen years after the Snowtown site was the dumping ground for eight of the notorious “bodies in barrels,” buyers were encouraged to “purchase a piece of Australian history.”
It advised potential buyers to ‘enquire into the nature’ of the illegal activities conducted and it sold to knowing purchasers for just under $200k.
Whereas the Manson murder house in the US, for example, was demolished because it’d be unlikely to ever sell in its original state.
Buying a ‘haunted house’
US disclosure laws are much stronger than Australia’s - so much in fact that they include the sale of ‘haunted houses’.
People have actually been released from contracts or have sued for damages after buying ‘haunted houses’ without being told.
Our laws here are definitely not broad enough to apply to ghosts. But you can always ask.
And look, there are plenty of other things in addition to death, drugs or demons to look out for.
Properties prone to floods or fires or homes built around contaminated land are going to be big issues going forward. So it’s definitely worth the research and a few well-placed questions.
Buyers beware, after all.
