Don't mention the floods

There are no legal restrictions in Queensland, or elsewhere across the nation, on selling flood-affected real estate, although local councils may require people building new homes or extending existing ones to ensure floor levels are above specified flood levels. Incidentally, in Queensland, council flood search replies received by buyers’ solicitors invariably give “no warranty” on the “accuracy of the information”.

When I pressed my Law Society on the need for a consumer-protective contract flood clause I received this unhelpful reply, which only a lawyer could have crafted: “Whether or not the standard contract included a clause which in effect said the sale was subject to the property not being flood-affected was considered. It was decided that such a clause would be extremely difficult to draft given the nature of flooding records kept by various local authorities and that, in the standard contract, the clause was probably not necessary.”

At the same time I asked Queensland’s Office of Fair Trading, on behalf of an unhappy home-buyer, if estate agents should disclose flood information. The answer was classic Catch 22, and no more helpful: “You have raised concerns that the contract entered into by your client related to property which was found to have been substantially flooded and this information was not provided to her… It is considered it is not generally the function of an estate agent to provide information available from searches of local authority records.”

When Fair Trading prosecuted an agent for not revealing what he knew about a property’s termite damage, the Queensland Civil and Administrative Tribunal ruled that the “prudent course” for the agent was “to remain silent” and let the buyers pursue their own enquiries. No matter that the Tribunal failed to consider that, by law, misleading conduct includes “wilful concealment of a material fact”. So far as I am aware, the only real estate agency ever successfully prosecuted for “misleading conduct by silence” was the New South Wales L.J. Hooker agency which sold a home without disclosing that it had been the scene of a triple murder.

So if you are looking to buy in Queensland, or anywhere else for that matter, remember to ask about flooding. No matter what sort of reply you receive, still make your own independent enquiries. And ensure your solicitor adds a special contract condition permitting you to cancel if council searches reveal the watery worst. Your solicitor won’t find such a condition too difficult to draft. (By the way, here’s a tip from my own personal experience. If you’re looking to buy or rent, and have your suspicions about past flooding, just ask any long-term and long-memoried neighbour!)

What of flood-prone real estate disclosure elsewhere in Australia? Please correct me if I’m wrong, but to my knowledge, there are no laws anywhere specifically requiring auctioneers, agents or owners to disclose flood information to prospective buyers or tenants. Only the Northern Territory and Tasmanian governments are in the process of finalising pre-contract disclosure laws.

Not that Tasmanian sellers will have to give buyers specific flood information. It seems that Apple Isle buyers will receive only a general warning like this:

“The property may be subject to periodic flooding (i.e. when land that is not usually submerged by water is flooded every so often) or located in a flood-prone area (an area that has a tendency to become submerged by water frequently). It is therefore in your interest to undertake an investigation as to whether or not the property is affected or prone to be affected by flooding before you commit yourself to buy.”.

On the other hand, the Northern Territory’s draft disclosure regulation stipulates that the seller must provide a declaration stating “information known to the seller” about whether the property being sold has “previously been flooded”.

Finally, the best news for owners of currently flooded properties is that white-ants probably can’t swim!