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Most compliance failures start the same way: an agent knew something about a property and said nothing.
Under the Property and Stock Agents Act 2002 (NSW), licensed agents must disclose known material facts to prospective buyers. This guide covers what qualifies, how to disclose, and what happens when you don't.
The Property and Stock Agents Act 2002 and the Property and Stock Agents Regulation 2022 establish the disclosure framework for NSW real estate transactions. Agents who hold — or act under — a licence issued by NSW Fair Trading are bound by these obligations.
A material fact is any information about a property that a reasonable person would consider significant when deciding whether to purchase, or what price to offer. The test is objective — it does not matter whether the agent personally considers the fact important.
Agents must also comply with the Australian Consumer Law (Schedule 2, Competition and Consumer Act 2010), which prohibits misleading or deceptive conduct in trade or commerce. Silence about a material fact can constitute misleading conduct.
These are the most common categories. The list is not exhaustive — any fact that meets the "reasonable buyer" test may qualify.
A systematic approach to meeting your disclosure obligations on every listing.
Inspect the property thoroughly. Review council records, planning certificates (section 10.7), strata reports (if applicable), and any information the vendor provides. Ask the vendor directly about known defects, disputes, and history.
Apply the ‘reasonable buyer’ test: would this information influence a purchasing decision or the price offered? If yes, it is likely a material fact. Categories include physical defects, legal encumbrances, environmental risks, and neighbourhood factors.
Create written records of each material fact, when it was discovered, the source of information, and any supporting evidence. This documentation protects you if a dispute arises later.
Provide written disclosure to all prospective buyers as early as practicable. Include material facts in the contract for sale or a separate disclosure statement. Obtain written acknowledgement of receipt where possible.
Disclosure is not a one-off task. If new material facts emerge during the sales campaign, disclose them promptly to all interested parties. Keep your records current.
The penalties are real, and NSW Fair Trading actively investigates complaints.
Source: Property and Stock Agents Act 2002 (NSW), administered by NSW Fair Trading. Penalty amounts are set by regulation and may change — always verify current figures before relying on specific dollar amounts.
Common questions about material facts disclosure obligations in NSW.
A material fact is any information about a property that would reasonably be expected to influence a buyer’s decision to purchase, or the price they would offer. Under the Property and Stock Agents Act 2002 (NSW) and associated regulations, licensed agents have a statutory obligation to disclose known material facts to prospective purchasers.
The primary legislation is the Property and Stock Agents Act 2002 (NSW) and the Property and Stock Agents Regulation 2022. NSW Fair Trading administers the licensing and compliance framework. Agents should also be aware of obligations under the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010) regarding misleading or deceptive conduct.
Non-disclosure can result in disciplinary action by NSW Fair Trading, including suspension or cancellation of your licence. Monetary penalties apply — check the current penalty schedule on the NSW Fair Trading website, as amounts are updated periodically. Agents may also face civil claims for damages from buyers who relied on incomplete information.
If you become aware of a material fact through any means — your own observation, third-party information, or property records — you have an obligation to disclose it. The duty is not limited to what the vendor tells you. When uncertain whether something qualifies, the safer course is to disclose.
Best practice is written disclosure, provided to prospective buyers before exchange of contracts. This can be via the contract for sale, a separate disclosure document, or written correspondence. Written records protect both the buyer and the agent. NSW Fair Trading guidance recommends disclosure as early as practicable in the sales process.
The obligation relates to facts that are material — that is, facts a reasonable person would consider significant when deciding whether to buy. Publicly available information (such as zoning data on council websites) and defects that are obvious on reasonable inspection may not trigger the same obligation, but the boundaries are not always clear-cut. When in doubt, disclose.
Agents should maintain records of all material facts identified, when and how they were disclosed, and to whom. Keep copies of written disclosures, emails, and any signed acknowledgements. The Property and Stock Agents Regulation 2022 sets out record-keeping requirements — check the current regulation for minimum retention periods.
Material facts should be disclosed during the marketing period, before the auction. Auction contracts in NSW are typically unconditional (no cooling-off period), which makes pre-auction disclosure even more critical. Any material fact discovered after contracts are exchanged may still give rise to legal consequences if it should have been disclosed earlier.
The CPP41419 Certificate IV in Real Estate Practice covers material facts, agency law, and compliance obligations. Choose an accredited RTO and get it right from the start.