What is a Material Fact in Real Estate?

If you’re buying properties in Melbourne and Australia, doing your due diligence is important, so you are not caught out by surprises. Part of the due diligence process will include understanding the "material facts" which can influence you buying decision. Doing it properly, can potentially save you from any nasty (and expensive) surprises. In this article, we will discuss what a "material fact" is, what it includes and why they are important in your real estate buying decisions.

What is a Material Fact in Real Estate?

A material fact in real estate is any piece of information that would likely affect a reasonable person's decision to buy, sell, or rent a property, or the price they would be willing to pay. Sellers and their agents have a legal and ethical obligation to disclose these material facts, which can include significant property defects like structural issues or pest infestations, environmental risks such as flooding or bushfire history, and even details about past violent crimes, death on-site or drug use on the property, etc. In Victoria, vendors and their agents have a legal duty to proactively disclose known material facts—not just when you ask.

The Legal Requirement. Why Disclosure Matters.

In Melbourne and Victoria, two frameworks forms the backbone of the need for disclosure:

1. Victorian rules on material facts. Consumer Affairs Victoria (CAV) issues guidelines explaining what a material fact is and when agents/vendors must disclose it. The duty is proactive once a buyer indicates interest, and concealing a material fact can be an offence. - Consumer Affairs Victoria

2. Australian Consumer Law (ACL). All agents and vendors must avoid misleading or deceptive conduct in trade or commerce (ACL s.18). Even if a fact isn’t on a list, omitting it can still be misleading in context. - Australian Contract Law

What is Considered a Material Fact?

A material fact is contextual. It depends on the property, market and what a reasonable buyer would care about. CAV’s guidance and common practice include examples such as:

• Structural problems or significant defects: subsidence, major water ingress, termite damage, non-compliant or unapproved works.

• Orders, notices or legal issues: building notices, council orders, outstanding compliance, unregistered easements. - Legalfinda

• Safety and cladding risks, asbestos or contamination (including prior meth labs).

• Natural hazard and environmental risks: flooding, bushfire, overland flow, landslip.

• Neighbourhood or external impacts: planned road widenings, rezoning, or developments likely to materially affect amenity/value.

• Stigma/“history” where relevant: serious crimes, deaths or events that a reasonable buyer (or a buyer the agent knows) would likely treat as important.

Key point: There’s no exhaustive list—if a fact would likely influence a reasonable buyer’s decision or price, treat it as material. - Consumer Affairs Victoria

Material Fact vs Section 32 (Vendor’s Statement)

In Melbourne and Victoria, the Section 32 sets out prescribed information (title, rates, easements, notices, etc.). But not every material fact appears in Section 32, and a “clean” Section 32 does not excuse an agent from disclosing other important issues. Think of it this way:

• Section 32 = mandated disclosures under the Sale of Land Act (Vic)

• Material facts = everything else the vendor/agent knows that a reasonable buyer would want to know

If a Vendor Statement is incomplete or misleading, buyers may have rights to rescind or claim damages—speak to your lawyer quickly. elaminelaw.com.au

When Must Agents Disclose the Material Facts?

Under CAV’s guidelines, vendors/sales agents must disclose all known material facts as soon as a buyer shows genuine interest (e.g., requests a contract or Section 32, books a second inspection). Knowingly concealing a material fact can attract penalties, and in some circumstances criminal sanctions. - Burke Lawyers

Agents also must not mislead by silence under the ACL—if the overall impression would likely mislead without a key fact, they should disclose it. - Australian Contract Law

Practical Examples (Melbourne Context)

Some examples which can usually happen in buying properties in Melbourne includes:

• A charming period home in a flood overlay—recent overland flow through the yard after storms = material.

• A townhouse with unapproved deck—no final sign-off; council notice pending = material.

• High-rise with combustible cladding rectification—special levy scheduled = material.

• A home used as a clandestine drug lab—even after remediation, the history may be material, especially if a buyer asks.

• Next door development approved—overshadowing and privacy impact = material to many buyers.

• Deaths on property—both natural and otherwise = material to many buyers.

How Buyers Should Protect Themselves

1. Ask direct, written questions.

Email the listing agent: “Are there any material facts we should know about—structural, legal, environmental, historical, or otherwise—that could affect value or our decision to buy?” Keep the written trail.

2. Request evidence.

If the agent makes assurances (e.g., “works are approved”), ask for permits, final inspections, or engineer’s reports.

3. Run your due diligence.

Building/pest inspections, council planning searches, flood/bushfire maps, owners corporation minutes & budgets, and title searches.

4. Escalate early.

If something feels off, ask your conveyancer/solicitor to review the contract and Section 32 before you bid or sign.

5. Use professionals.

If you are unfamiliar with Section 32, local Victoria/Melbourne based buyers advocates can help identify concerns in the disclosures (e.g., incomplete Section 32, suspicious renovations, strata underfunding) and push sales agents for disclosure, saving you time, money and stress.

What if a Material Fact was Not Disclosed?

If you learn about a material issue after signing:

• Stop and seek legal advice immediately. This is where having the settlement done by a solicitors would excel over conveyancers.

• Depending on the situation, you may be able to rescind the contract, seek damages, or negotiate price / terms before settlement. Courts have ordered strong remedies where omissions materially affected a buyer’s decision. - Legalfinda

Buyer’s quick checklist (print this)

• □ Ask, in writing: “Any known material facts?”

• □ Review Section 32 & contract with your conveyancer. - elaminelaw.com.au

• □ Order building & pest (and specialist reports if needed).

• □ Check overlays & hazards (flood/bushfire; council plans).

• □ For strata: obtain OC minutes, budgets, levies, insurance.

• □ Confirm approvals for renovations/additions (final sign-off).

• □ Document everything (email trail).

How a Melbourne buyers advocate helps

At Concierge Buyers Advocates, we combine street-level experience with forensic due diligence to uncover material facts before you commit. Our builder trained buyers advocates performs an initial assessment of the property during onsite inspections, and review Section 32 disclosures, check overlays and pressure-test agent claims against evidence. When something doesn’t stack up, we flag it—and either adjust price/terms or walk you away.

Buying in 2025 and 2026? Get an independent second opinion before you bid or buy. We’ll help you avoid overpaying, avoid surprises, and buy with confidence.

Sources

• Consumer Affairs Victoria, Preparing to sell your property – Material Fact Guidelines (definition & duty to disclose). - Consumer Affairs Victoria

• Sale of Land Act (Vic) updates and material fact disclosure obligations (penalties & proactive disclosure). - Burke Lawyers

• Australian Consumer Law s.18 – misleading or deceptive conduct (applies to real estate). - Australian Contract Law

• Section 32 (Vendor’s Statement) obligations (rescission if inadequate). - elaminelaw.com.au

The importance of

When you buy or sell property in Victoria, you will become quickly acquainted with the terms ‘Section 32’ or ‘Vendor’s Statement’. A Section 32 contains information about certain aspects of your property relevant to potential buyers. Our coburg conveyancers will assist you with the preparation of this document in anticipation of a sale of land. A contract can be rescinded by a Purchaser if a satisfactory Vendor’s Statement is not provided at the time of sale ( s32K of the Sale of Land Act 1962 (Vic)).

However, what happens when you fail to disclose important information about the property, but this information does not fall under one of the prescribed ‘disclosure’ sections of the Sale of Land Act 1962 (Vic)? Do you have to disclose this information?

The short answer is, it depends on what information needs to be disclosed!

On 1 March 2020 new disclosure obligations were introduced for Vendors and their Real Estate Agents with changes being made to the Sale of Land Act 1962 (Vic) (Act).

Vendors and their Agents must now disclose “material facts” to interested parties during negotiations for the sale of real estate (Material Fact).

The new section 12(d) of the Sale of Land Act states:

Any person who, with the intention of inducing any person to buy any land—

(d) makes or publishes any statement promise or forecast which he knows to be misleading or deceptive or knowingly conceals any material facts or recklessly makes any statement or forecast which is misleading or deceptive

shall be guilty of an offence against this Act…

Knowingly concealing a material fact is a breach of the Act and may result in a penalty of 120 penalty units ($19,826.40) or up to 12 months imprisonment.

How do I know if something is a ‘material fact’?

The legislation does not provide a definition of what a material fact is.

However, Consumer Affairs has specified two categories of facts which are intended to be captured:

General: a fact that an average, reasonably informed purchaser with a fair-minded understanding of the property market, including the role of an estate agent, would generally regard as material in their decision to buy property.

Specific: if a fact about land is known by the vendor (or the vendor’s agent, including an estate agent) to be important to a specific purchaser, it can be material, even if other agents and consumers would not generally consider that fact to be important or of significance to them. This knowledge could arise if (for example) a particular purchaser:

asks a specific question about the property of the vendor or the vendor’s agent (including their estate agent), and/or

where a purchaser informs the vendor/agent of their intended use of the property.

A material fact is a fact that would be important to a potential purchaser in deciding whether or not to buy any property. In the context of a proposed sale of property, a material fact is one that influences a purchaser in deciding whether or not to buy any property at all, or to buy property only at a certain price.

Deciding if something is a Material Fact

Further indications relevant to determining if something is a material fact include:

whether the fact is only known by the vendor

the reaction of other potential purchasers to the fact, including whether if the Purchaser knew of the fact this may impact their willingness to buy the property, and

whether the fact results in the property being in a rare or unusual category or position.

Examples of established Material Facts are:

that the property was the site of a murder or other major crime;

combustible cladding or asbestos being located on or in the property;

prior use of the property as an illicit drug laboratory; and

building work on the land that does not have the required building or planning approvals.

Material Facts vs. Making Your Own enquiries

Vendors and Real Estate Agents can no longer rely on purchasers “discovering” Material Facts through making their own inspections.

Vendors and Agents now have an obligation not to conceal Material Fact. As a vendor you must be very careful when deciding whether a Material Fact exists in relation to your property and if so, the appropriate manner in which this fact should be disclosed (such as in direct negotiations with the purchaser and/or in the contract itself for the purposes of clearly recording the nature of the disclosure).

To assist our clients and their agents to ensure Material Facts are identified early in the selling process we have developed a “Material Fact Checklist” which you will complete as part of supplying us with information for your Vendors Statement.

For more information, please contact us.