26 February 2020
This article is part of the RTA in Focus series. With a raft of reforms to the residential tenancies framework set to start on 23 March 2020, we’re giving you the information you need to ensure you understand your obligations.
You can access all the articles in the RTA in Focus series here.
Drug activity, strata repairs and external combustible cladding have been added to the list of prescribed material facts a landlord or their agent are required to disclose to potential tenants.
It’s fair to say that a lot of people don’t want to live in a home where something unpleasant has occurred. For example, if a murder or violent crime has been committed at a property, there are many people who would object to making it their home. Ongoing occurrences like excessively noisy neighbours can also be off-putting.
Perhaps it would make no difference to you, but for countless prospective tenants with cultural, religious or superstitious beliefs, it can.
“This is what makes the issue of ‘material fact’ so difficult,” Michelle McLean, Senior Property Manager at Leah Jay and Chair of the REINSW Property Management Chapter Committee, said. “What’s an important consideration for one person may be completely irrelevant to someone else.
“Added to this is that we can only disclose what we know. If our landlords don’t tell us, we’re not in a position to disclose relevant information to the tenants.”
All property managers need to understand the law when it comes to material facts. Importantly, you need to know how your disclosure obligations will change with the commencement of the residential tenancy reforms on 23 March 2020.
Section 26 of the Residential Tenancies Act 2010 (NSW) sets out that a landlord or their agent must not knowingly conceal a prescribed material fact to induce a tenant to enter into a residential tenancy agreement.
Currently, the Residential Tenancies Regulation 2010 (NSW) prescribes the following as material facts:
On and from 23 March 2020, a number of additional material facts will now require disclosure if the landlord or their agent is aware of them.
Clause 8 of the Residential Tenancies Regulation 2019 (NSW) sets out that, in addition to the material facts set out above, the following must also be disclosed by a landlord or their agent as material facts:
Michelle welcomed the additions to the list of prescribed material facts to be disclosed.
“Anything that provides greater clarity for property managers is a good thing,” she said. “And, in turn, when we’re talking to our landlords, we can point to the fact that it’s the law for them to disclose certain things.
“Perhaps the biggest issue property managers face when it comes to material facts is that we don’t know what we don’t know. We can only disclose the things we know about and there are landlords who are not forthcoming about certain things relating to their property.”
Michelle gave the example of taking over the management of a property that was previously used as a meth lab.
“Yes, all the remediation and cleaning work may have been done by the previous property manager, but what if the landlord doesn’t tell you what’s happened previously?” she asked. “It’s definitely a material fact requiring disclosure, but how are you supposed to know if the landlord keeps it under wraps?
“At the end of the day, you can only disclose what you know.
“That’s why it’s necessary to ensure your landlords understand the importance of disclosing material facts. If they don’t disclose something to you, then you can’t disclose it to the tenant. If the tenant then later finds out, they can walk away with only 14 days’ notice.”
Beyond the list prescribed by clause 8 of the Regulation, Michelle said that it’s best practice for a property manager to disclose as much as possible.
“I believe it’s always better to over-disclose rather than under-disclose,” she explained. “It’s in everyone’s interests. It’s that simple.”
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