Seller’s Disclosure: Are you just Dumping Data?

Nadine Wismayer
3 days ago
4 min read

The new seller’s disclosure regime under the Property Law Act 2023 is now in full swing.

Consequently buyers, sellers, agents and property lawyers are getting their heads around the most efficient way to perform proper disclosure as a seller and review that disclosure as a buyer.

But sadly, a monster has now entered the disclosure arena. It is bulky, abusive and expensive to look after.

And in our opinion, it’s quite possibly going to get someone in trouble.

So let’s talk about it before it gets out of hand.

But First, A Reminder What Proper Disclosure Looks Like

Proper disclosure under the PLA23 involves:

Filling out the Form 2 correctly, based on information or instructions; and
Attaching any necessary documents.

Note: as we’ve mentioned before, the Form 2 disclosure is not the only kind of disclosure required, and other pieces of legislation, regulation and under the contract have additional disclosure requirements.

We’ve emphasised the word “necessary” above, because an awful habit has crept in to the way people are doing seller’s disclosure.

Introducing: the Data Dump Monster

Since we’re property lawyers, we’ve seen a lot of disclosure since 1 August.

So we can tell you that the horrible creature we’re about to describe is not a lone, isolated incident – it’s rearing its ugly head over and over again.

Here’s what the monster looks like:

A barely completed form 2 with minimal information in it; and
300 pages of attached documents, searches, reports and drivel.

The Data Dump Monster (or DDM for short) is, it seems, how many performing seller’s disclosure have decided to do it “efficiently”.

You see, the keepers of the DDM tell themselves that as long as they attach enough documents they can’t get in trouble for failing to disclose properly. And if they just dump everything there, they don’t need to think about it that hard and so it’s faster and more profitable… for them.

But is the DDM method really compliant?

Is the DDM Really Compliant Disclosure?

The question is this: are you, in effect, failing to make disclosure of a material fact if you simply bury that fact in the middle of 300 pages of attachments to your Form 2?

The legislation doesn’t deal explicitly with this kind of situation, presumably because the drafters didn’t predict that people would just dump a pile of searches on unsuspecting buyers rather than doing the job properly.

But here is one possible argument against the DDM being compliant, bearing in mind there is no case law on this topic yet.

The requirements of section 99 are that you must provide to the buyer: first, a disclosure statement; and second, “each document prescribed by regulation”.
Next, section 99(2) says the disclosure statement “must”:
- Be in the approved form;
- Include the information prescribed by regulation;
- Be completed with true information; and
- Be signed.
Neither section mentions additional documents or explanations beyond those specified. Arguably, by including information or documents as part of the disclosure process that is not specified above, you are therefore NOT making disclosure in accordance with the section. The mandatory introduction of “must” suggests that you MUST include information prescribed by regulation, and arguably MUST NOT include information that is not prescribed by regulation.

Now we cannot say with any certainty that the above reasoning would be accepted by a Court in the event of a dispute, but from our perspective the DDM is simply not proper disclosure.

Is Data Dumping just Concealing Material Facts?

So, let’s turn then to the buyer’s right to terminate.

A buyer can terminate if, among other things, the seller fails to disclose a material fact.

So, what if a material fact is found at line 42 on page 149 of the attachments to your seller’s disclosure?

Have you really disclosed that fact?

Arguably, by burying the disclosure in the middle of unnecessary, irrelevant other documents you have, in fact, actively concealed the fact from the buyer rather than disclosed it.

Sellers’ solicitors and agents (and the agents’ Form 2 non-law firm service providers) must remember that this is a disclosure regime designed to protect buyers. If the way you perform disclosure actively works against the underlying purpose of the legislation, then you are deliberately subverting the express intentions of the legislation.

From that perspective, therefore, we expect that a Court is going to interpret the relevant provisions from a consumer protection perspective, and won’t be going out of its way to defend sharp practices of over-disclosure and concealment, even if somewhere in the middle of your bundle was the material fact in question.

It’s Rude, and Expensive

This last point is obviously not a legal argument, but one of etiquette and professionalism.

The facts are that:

Bulky disclosure bundles are completely useless to a buyer;
A buyer is not going to read them and even if they do will forget most of it;
A buyer is therefore either going to:
- ask their solicitor to read it, at significant expense; or
- get their solicitor to make their own enquiries, which frankly is going to be cheaper than reading your DDM.

Once again, we suggest that the DDM is materially subverting the entire purpose of the legislation. Buyers won’t read it, gain no protection from it and costs are simply increased for everyone.

The seller pays for the useless disclosure and the buyer pays even more to read it or just start from scratch.

And to be honest – we’re all fairly busy, so dumping a buyer’s solicitor with a ream of paper because you don’t want to do the job properly is just plain discourteous.