A landlord’s duty of disclosure

25 Mar A landlord’s duty of disclosure

A violent crime has recently been committed in your investment property. Would you disclose this to a prospective tenant?

I hope so, because basically the law says you must.

As the owner you are required to disclose information to a prospective tenant that can be classed as a ‘material fact’. With a residential rental property, a material fact is defined as:

‘Information that a reasonable person would count as relevant to their decision to rent a property when suppression of that information would reasonably result in a different decision being made.”

So, if a prospective tenant knew that a violent crime had recently been committed in your property, they quite reasonably might decide not to rent the premises. Withholding the information would provide grounds for the tenant to terminate the lease.

Properties where events such as a recent violent crime has been committed are said to be ‘stigmatised’. These events are things unrelated to the physical conditions or features of the property–so the prospective tenant won’t necessarily know they have occurred just by doing an inspection. That is why the duty is on the owner to disclose this information.

Other stigmatising events include the recent death of an occupant or the belief that a house is haunted (believe it or not).

Another definition worth knowing is ‘recent’. How far back does one have to go when declaring material facts causing stigma? The previous five years is accepted as fair.

Not all material facts are related to stigma. More mundane things are required to be disclosed also. Some examples are:

• the premises have been subject to a recent serious natural disaster
• the premises have significant health/safety risks that are not apparent on inspection
• residential parking permits are required
• any easements on the property allowing others access
• major construction works due to commence close to the property which may cause disruption

Remember, you must disclose any information that a reasonable person would use to make the decision to rent your property.