Mould, Meth +/or Murder? ➲ Murky Matters in Australian Property Law

19/11/2021

Property Law + Conveyancing

Mould, Meth +/or Murder? ➲ Murky Matters in Australian Property Law

Generally, even if you, your lawyer or conveyancer are extremely diligent certain facts will still not be capable of being uncovered via visible inspection or routine searches. What then can you do to avoid finding yourself owning, living or running a business from a property affected by Mould, Meth +/or Murder?

James D. Ford GAICD

Founder, M.D. & General Practice Lawyer

Contents

Background

1️⃣ Meth

Meth Lab in the Suburbs

2️⃣ Mould

Luxury Beach House with a Leaky Pool

3️⃣ Murder

A Murder Next Door

A Murder at the Property being Inspected

Legal Analysis ➲ Did the Owner +/or Agent do anything wrong by not Disclosing the Murder?

Omission by Vendor / LL / Agent regarding Material Facts in NSW

What constitutes Material Facts?

Background

This blog article is the culmination of a mixture of both personal + legal experiences in dealing with, as it happens, property matters involving Meth, Mould + Murder!

These kinds of matters are not apparent on a cursory visible inspection of a property + are all capable of either ignorance on the part of the vendor / landlord / agent or if they are aware of the issue, omission or misleading + deceptive conduct.

The 3 M's, when they arise (and they tend to arise more often than you would think!) create complicated legal disputes which are potentially very damaging to both the vendor and purchaser / landlord and tenant.

If you have found yourself in the midst of a legal dispute regarding the 3M's, please contact our legal team to discuss your options.

We strongly recommend you always consider whether preventative steps (refer discussion below) can or should be taken as part of your due diligence regarding any property you are considering purchasing or leasing.

In any event, please always ensure you have appropriate + adequate insurance coverage.

1️⃣ Meth

Meth Lab in the Suburbs

A client (name and details remain confidential) discovered a Meth issue after living in the residential property for several months.

The clients' children started to develop strange rashes... a syringe was found lying in the grass in the back yard... etc.

When an expert was called to test for meth residue, the levels in the property were found to be dangerous to human health.

It seems that the property had been used by prior tenants as a meth lab.

Both the landlord and the agent claimed they both knew nothing about the issue.

The cost to rectify the problem was substantial both for the landlord and the tenant.

Where there is meth residue at dangerous levels there will typically be large expenses which will need to be incurred by both the landlord and the tenant including the following:

❌ The property needs to be urgently evacuated (so there is lost rent);

❌ All exposed clothes and soft-furnishings (sofa), carpet, etc. need to be either destroyed/cleaned;

❌ The tenant has to urgently search for and move or store what they can salvage, potentially to a hotel whilst they look for longer-term accomodation.

Preventative Steps

✅ Consider whether to engage a professional, licensed and insured Meth Testing Company to conduct testing before you commit to lease/purchase a property.

2️⃣ Mould

Luxury Beach House with a Leaky Pool

A client (name and details remain confidential) leased a very expensive multi-level property near the ocean with a pool located on one of the top levels.

Some time after moving in black mould was discovered throughout the property.

Water had leaked down from the pool into the internal lower levels of the house.

Upon investigation it was discovered that prior to taking possession of the property there had been existing mould, but it had been painted over to hide its existence by the tradesman who looked after the maintenance of the property.

As part of the lease documents the agent provided a Mould Warning fact sheet.

Where there is black mould at dangerous levels in a residential property it is a health & safety issue.

As the property is not habitable there will typically be large expenses which will need to be incurred by both the landlord and the tenant including the following:

❌ The property needed to be urgently evacuated (so there is lost rent);

❌ All exposed clothes and soft-furnishings (sofa), carpet, etc. need to be either destroyed/cleaned;

❌ The tenant has to urgently search for and move or store what they can salvage, potentially to a hotel whilst they look for longer-term accomodation.

Preventative Steps

✅ Whenever there is a Mould Warning fact sheet provided by an agent, be on high alert;

✅ Seek professional advice + take proactive steps to monitor and collect any humidity within the property; and

✅ Have your Building Inspector look at the roof, and all possible entry points for water entry inside the property.

3️⃣ Murder

Both the below experiences involving murders + property are described from my personal knowledge of the matters.

A Murder Next Door

Upon approaching the entry to the property, we noticed that flowers had been placed at the bottom of a tree in the front yard of the neighbouring property.

When an enquiry was made of the agent, they professed to know nothing about it.

On a subsequent visit to the property,  the taxi driver upon arrival made a comment about the recent murder.

Note: The legal obligation to disclose a Murder imposed by NSW legislation on an agent (see below) does not relate to a neighbouring property, only the property they are selling or leasing.

A Murder at the Property being Inspected

A murder had been committed at the city apartment several years before.

In turns out that a drug dealer pushed his partner from the high-rise balcony of the apartment.

The rental history of the property showed that the tenants never stayed beyond their initial lease term.

It appears that the property was a revolving door... no explanation was apparent regarding why this was the case?

The property inspection was first thing early on a Sat morning...

This property was too good to be true, well priced, well located, spacious and well appointed.

It had magnificent views such that the timing of the inspection seemed suspicious.

No-one else attended the inspection!

The person who showed the property, was not the agent who had the listing.

The person showing the property, did not proceed past the inside of the front door to the property, provided no business card, did not mention their name and after the inspection was completed they were no longer contactable.

Something was not right!

As part of general due diligence regarding the property (noting that a Google search of the property address is not on any standard lawyer/conveyancer search checklist) a Google search revealed an old article (specifically mentioning the apartment number) which covered the full story.

A dispute arose regarding the deposit, which I was able to recover in full.

Legal Analysis ➲ Did the Owner +/or Agent do anything wrong by not Disclosing the Murder?

Apart from the potential for a Misleading + Deceptive Conduct claim under Australian Consumer Law (which applies whether or not the conduct was intentional) there is also NSW legislation (see the tenancy example below) regulating property owners + property agents with respect to the sale and/or lease of property.

The NSW Residential Tenancy legislation provides for a maximum $22k penalty which can be imposed even if the owner/agent was not aware of the problem (and they could have discovered it by appropriate due diligence).

In this case, the murder occurred a little more than 5 years ago (which is the timeframe specified in the regulations) so it is unlikely the NSW legislation would be directly applicable.

However, the broader question of whether there was Misleading + Deceptive Conduct may have had some application if the matter had proceeded to a Tribunal or Court.

Omission by Vendor / LL / Agent regarding Material Facts in NSW

Omission by Landlord / Agent

Sec. 26 of the Residential Tenancies Act 2010

26 DISCLOSURE OF INFORMATION TO TENANTS GENERALLY

(1)   False representations A landlord or landlord's agent must not induce a tenant to enter into

a residential tenancy agreement by any statement, representation or promise that the landlord or

agent knows to be false, misleading or deceptive or by knowingly concealing a material fact of

a kind prescribed by the regulations.  

Maximum penalty--20 penalty units.

Omission by Vendor / Agent

Section 52(1) of the Property, Stock and Business Agents Act 2002 (NSW) (Act), states inter alia that it is an offence for an agent to conceal a material fact that induces someone to buy.

What constitutes Material Facts?

Reg 8. Material Facts

Disclosure of information to tenants generally--s 26(1) of Act

8 DISCLOSURE OF INFORMATION TO TENANTS GENERALLY--S 26(1) OF ACT

(1) For the purposes of section 26(1) of the Act, the following material facts are prescribed--

(a) the residential premises have been subject to flooding from a natural weather event or bush fire within the last 5 years;

...

(c)   the residential premises are subject to significant health or safety risks [eg., Mould] that are not apparent to a reasonable person on inspection of the premises;

Note : Disclosure under this provision does not affect the legal obligations of the landlord with respect to the residential premises.

(d) the residential premises have been the scene of a serious violent crime [eg., Murder] within the last 5 years,

(e) the residential premises have been used for the purposes of the manufacture or cultivation

of any prohibited drug [eg., Meth] or prohibited plant within the meaning of the Drug Misuse and Trafficking Act 1985 within the last 2 years;

...

(j) the residential premises are part of a building in relation to which--

(i) a notice of intention to issue a fire safety order, or a fire safety order, has been issued requiring rectification of the building regarding external combustible cladding, or

(ii) a notice of intention to issue a building product rectification order, or a building product rectification order, has been issued requiring rectification of the building regarding external combustible cladding,

(iii) a development application or complying development certificate application has been lodged for rectification of the building regarding external combustible cladding.

Social Sharing Image: Courtesy of Clem Onojeghuo on Unsplash

Credits: This blog article was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This blog article is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.