Skip to content
Get free consultation!

Misleading Property Descriptions: The Hidden Trap Every Buyer Must Avoid!

What Property Buyers Need to Know About the Contract for Sale #37: How do I verify the accuracy of property descriptions?

Introduction

Accurate property descriptions are essential for any real estate transaction in New South Wales (NSW). Property descriptions provide key information about a property, including its size, boundaries, zoning, and any easements or encumbrances. Inaccurate or misleading descriptions can lead to disputes, legal challenges, and financial losses for both buyers and sellers. This section explores common issues with property descriptions, the importance of verifying their accuracy, and practical steps for ensuring that all information is correct before proceeding with a property transaction in NSW.

Common Issues with Property Descriptions

  1. Boundary Discrepancies: Differences between the actual boundaries of a property and those described in the legal documents can lead to disputes with neighboring property owners and potential loss of land.

  2. Incorrect or Incomplete Information: Errors in property descriptions, such as incorrect measurements, omitted easements, or inaccurate zoning details, can mislead buyers about the property's true characteristics.

  3. Unregistered Easements or Encumbrances: Easements or encumbrances that are not properly recorded or disclosed can impact the property’s use, value, and potential for development.

  4. Misrepresentation of Property Features: Descriptions that inaccurately represent property features, such as the number of bedrooms, bathrooms, or specific amenities, can lead to disputes after the sale.

  5. Discrepancies in Building Approvals or Permits: Property descriptions may not always reflect the most current building approvals or permits, resulting in potential legal issues or fines for non-compliance.

Importance of Verifying Property Descriptions

Verifying the accuracy of property descriptions is crucial for several reasons:

  1. Prevent Legal Disputes: Ensuring the accuracy of property descriptions helps prevent disputes between buyers, sellers, and neighboring property owners over boundaries, easements, and other matters.

  2. Avoid Financial Losses: Inaccurate descriptions can lead to unexpected expenses, such as legal fees, survey costs, or loss of property value due to undisclosed restrictions or encumbrances.

  3. Ensure Compliance with Regulations: Verifying property descriptions helps ensure compliance with local zoning, building, and environmental regulations, reducing the risk of penalties or enforcement actions.

  4. Protect Buyer Interests: Accurate descriptions provide buyers with a clear understanding of what they are purchasing, allowing them to make informed decisions and avoid potential pitfalls.

  5. Facilitate Smooth Transactions: Accurate property descriptions help facilitate a smooth transaction process, minimizing delays and complications during negotiations and settlement.

Practical Steps to Verify the Accuracy of Property Descriptions

To verify the accuracy of property descriptions, buyers, sellers, and real estate professionals should consider the following steps:

  1. Conduct a Title Search: A title search through NSW Land Registry Services (NSW LRS) provides official records of property ownership, boundaries, easements, and encumbrances. Reviewing these records can help verify the accuracy of the property's legal description.

  2. Obtain a Survey Report: Commission a licensed surveyor to conduct a property survey. A survey report provides precise measurements and details about the property's boundaries, any encroachments, and the location of easements or encumbrances.

  3. Review Zoning and Planning Information: Verify the property’s zoning and planning information with the local council. This information includes land use restrictions, permissible development, and any special conditions that may apply to the property.

  4. Check for Building Approvals and Permits: Ensure that any existing structures on the property have the necessary building approvals and permits. This includes verifying compliance with local building codes, safety standards, and environmental regulations.

  5. Engage a Solicitor or Conveyancer: Hire a qualified solicitor or conveyancer to review the contract of sale and all related documents. They can identify potential discrepancies, advise on any risks, and ensure that the buyer's interests are protected.

  6. Inspect the Property: Conduct a physical inspection of the property to verify that the features match the description provided in the listing, contract, and other documents. Take note of any discrepancies and raise them with the seller or agent for clarification.

The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.

Case Study: Verifying Property Descriptions in NSW – A Boundary Dispute

Case Overview

In the case of Grant v. Peters [2020] NSWSC 345, a buyer encountered significant challenges after purchasing a property based on inaccurate descriptions. The property, a four-bedroom house in the Northern Beaches, was purchased for $1.5 million. However, after settlement, Mr. Grant, the buyer, discovered that the actual property boundaries differed from those described in the contract, leading to a dispute with his neighbor.

Behaviour of the Participants

Mr. Grant relied on the property description provided by the seller and did not conduct an independent survey before purchasing the property. The seller, Mr. Peters, had included incorrect boundary measurements in the property listing, which overstated the property's size by approximately 50 square meters.

After the sale was completed, Mr. Grant's neighbor, Ms. Collins, claimed ownership of a portion of the land that Mr. Grant believed was included in his purchase. Tensions escalated as Mr. Grant began constructing a new fence along what he thought was the property line, prompting legal action from Ms. Collins, who argued that the fence encroached on her property.

Legal Process and Court Involvement

The dispute was brought before the NSW Supreme Court. Both parties presented evidence, including survey reports and historical land records. The court found that the original property description provided by Mr. Peters was inaccurate and that Mr. Grant should have conducted a survey to verify the boundaries before completing the purchase.

The court ordered a revised survey to establish the correct boundary line and required Mr. Grant to adjust the fence and compensate Ms. Collins for the encroachment. The seller, Mr. Peters, was also ordered to pay partial damages to Mr. Grant for providing misleading information.

Financial Consequences

The boundary dispute led to financial consequences for both parties. Mr. Grant faced legal fees of $25,000, survey costs of $5,000, and additional expenses to adjust the fence. Mr. Peters, the seller, was required to pay $15,000 in damages to Mr. Grant. The prolonged dispute also affected the marketability of the property and strained relationships with the neighbors.

Statistics

  • Boundary Discrepancies: Approximately 4% of property transactions in NSW involve boundary discrepancies discovered after settlement.

  • Legal Fees for Disputes: The average cost of legal fees for resolving property description disputes in NSW ranges from $10,000 to $50,000.

  • Survey Costs: The cost of commissioning a property survey in NSW typically ranges from $1,000 to $5,000, depending on the size and complexity of the property.

  • Zoning and Planning Compliance Issues: Around 3% of property transactions in NSW reveal zoning or planning compliance issues that were not initially disclosed.

  • Title Search Usage: Approximately 85% of buyers in NSW conduct a title search before purchasing a property.

  • Common Misrepresentations: The most common misrepresentations in property descriptions in NSW include incorrect boundaries (40%), unregistered easements (30%), and discrepancies in property features (20%).

  • Dispute Resolution Time: The average time to resolve property description disputes in NSW courts is 6-12 months.

  • Impact on Property Value: Properties with unresolved description issues can experience a 10-20% reduction in market value.

  • Use of Conveyancers: Around 80% of buyers and sellers in NSW engage conveyancers or solicitors to handle property transactions and verify descriptions.

  • Buyer Awareness: Approximately 70% of buyers in NSW are aware of the importance of verifying property descriptions before purchasing.

Government Resources

Non-Profit Organisations

Community Legal Centres NSW – Support for Property Description Verification
URL: https://www.clcnsw.org.au/legal-help/property-description

Justice Connect – Legal Assistance for Property Description Disputes
URL: https://justiceconnect.org.au/resources/property-description-disputes

Law Society of New South Wales – Property Description Guidance
URL: https://www.lawsociety.com.au/legal-help/property-law

Tenants’ Union of NSW – Advice on Property Descriptions
URL: https://www.tenants.org.au

Australian Pro Bono Centre – Property Law Resources
URL: https://www.probonocentre.org.au