500-year-old legal principle still reigns
When it comes to buying property, caveat emptor reflects the old English common law rule (and is a legitimate legal defence) that the burden of discovering defects in a property rests with the purchaser, and the vendor is relieved from any duty to disclose facts simply because those facts might affect the purchaser’s decision.
However, the International Bar Association notes that there are three circumstances where a buyer could turn the tables – caveat venditor ('let the seller beware'):
- The vendor or agent made express or implied statements which conveyed a false impression about a property’s characteristics.
- The vendor knowingly disguised or concealed a physical defect in the property in order to mislead potential purchasers.
- A latent defect, flaw, fault, imperfection or irregularity in the property was not readily observable, such that the purchaser could not discover the defect through the exercise of ordinary care.
Although there are some protections for buyers, the best way to avoid the headache (and expense) is to do your due diligence:
- Check the Vendor Statement of the contract
- Ask the real estate agent questions (they are obligated to disclose any information they have if you ask) and
- Have building and pest inspections carried out by qualified professionals.