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What really is ‘Material Fact’?



Material fact is something that has now been long established within the New South Wales property industry and reinforced within the Property and Stock Agents Act 2002 and Property and Stock Agents Regulation 2022.

With the introduction of a set of prescribed disclosures has come many questions and assertions from agents that they no longer have to disclose any item that is not within the prescribed disclosures contained within Clause 60 of the Property and Stock Agents Regulation, which include:

  • within the last 5 years the property has been subject to flooding from a natural weather event or bush fire,
  • the property is subject to significant health or safety risks,
  • the property is listed on the register of residential premises that contain loose-fill asbestos insulation required to be maintained under the Home Building Act 1989,
  • within the last 5 years the property was the scene of a crime of murder or manslaughter,
  • within the last 2 years the property has been used for the purposes of the manufacture, cultivation or supply of a prohibited drug or prohibited plant,
  • the property is, or is part of, a building that contains external combustible cladding and there is a notice of intention to issue a fire safety order or a building product rectification order regarding the combustible cladding,
  • one or more of the following orders, within the meaning of the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020, is in force in relation to the property:
    • a building work rectification order,
    • a prohibition order or
    • a stop work order.

What is important to understand is that Section 52 of the Property and Stock Agents Act is not limited to ONLY the material facts that have been listed above.

Section 52 of the Act states that an agent must not induce any other person to enter into any contract or arrangement by any statement, representation or promise that is false, misleading or deceptive (whether to the knowledge of the agent or not), or by any failure to disclose a material fact of a kind prescribed by the regulations (whether intended or not) that the agent knows or ought reasonably to know. Examples of the types of things that an agent may disclose include if the agent has knowledge of a new development that may adversely impact the buyer’s purchase, a reduction in services available, or if the property is connected to an embedded network.

This section of the Act makes it clear that there are two parts to the obligation to disclose:

  1. to not induce a person to enter into a contract based on misinformation and,
  2. to disclose the material facts.

Is not telling someone a fact that they have not asked about the same as not disclosing a material fact or directly lying when asked a question? Under Section 52, it absolutely is all the same, it all amounts to misleading and deceptive conduct and the fines for a breach of section 52 can amount to $22,000.

ACOP trainers have a general rule when addressing misleading and deceptive conduct, material facts and the general question from an agent of “Should I disclose………?” The rule is, if you have to ask “should I disclose?”, then you already know you should be disclosing. Don’t risk your reputation for the sake of non-disclosure.

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