The Seller Disclosure Regime Was Meant to Protect You. Here is What It Actually Does.

By Damon Laffin, Director | Odyssey Legal | Maroochydore, Queensland

Why buyers across Queensland are discovering, too late, that the Form 2 Disclosure Statement left them exposed and what the law says about it.

We have seen a significant increase in enquiries from property buyers over recent months.

Not buyers who are about to purchase. Buyers who have already settled. People who are standing in their new home, the one they mortgaged themselves to acquire, holding a pest inspection report, a council enforcement notice, or an engineer’s assessment, trying to understand how a problem this significant was never once mentioned to them.

Most of them say some version of the same thing.

“I thought the disclosure statement covered this.”

It is an understandable assumption. Queensland’s seller disclosure regime, introduced under the *Property Law Act 2023* and operative from 1 August 2025, was presented to the market as a meaningful step forward in buyer protection. The legislation was years in the making. The Form 2 Seller Disclosure Statement was positioned as a standardised, comprehensive document that sellers must provide before a buyer signs.

The problem is that the Form 2 is not what most buyers think it is. It is a title document. It captures encumbrances, easements, body corporate matters, and certain statutory charges. What it does not capture, and was never designed to capture, is the physical condition of the property. And it is the physical condition that is causing the problems we are being, and have previously been, asked to resolve.

Termite infestations so advanced they have compromised the structural integrity of the home. Unapproved rooms or extensions that likely provided the termites their entry point. Boundary encroachments that have been simmering for years. Fencing disputes the seller knew about and never mentioned. None of it required to be disclosed under the regime.

What often makes these matters worse is that the seller is usually aware of the issues but remains silent to effect the sale.

The Form 2 tells a buyer about the legal history of a property. It says nothing about what is living inside the walls.

What the Regime Actually Requires

It is worth being precise about what the seller disclosure regime does and does not do, because there is genuine confusion in the market.

Under the *Property Law Act 2023 (Qld)*, a seller of residential property must provide a completed Form 2 Seller Disclosure Statement to the buyer before the buyer signs the contract. If the seller fails to provide it at all, the buyer has a right to terminate the contract and recover their deposit. If the Form 2 contains material inaccuracies or omissions on matters it is required to cover, the buyer may also have a termination right.

What the Form 2 is required to address:

(a) Encumbrances registered on the title (mortgages, caveats, easements, covenants);

(b) Body corporate matters for lots in community title schemes;

(c) Neighbourhood disputes instigated under the Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (i.e. QCAT proceedings on foot).

(d) Statutory charges and rates arrears;

(e) Certain planning overlays, including contaminated land and environmental management registers;

What the Form 2 expressly does not require a seller to disclose:

(a) Termite damage or active infestation, regardless of severity;

(b) Structural defects, whether caused by poor construction, movement, or deterioration, or works performed by the seller themselves;

(c) Unapproved or non-compliant building works;

(d) Flooding history or drainage issues;

(e) Boundary encroachments not the subject of legal proceedings;

(f) Neighbour disputes that have not been formally registered;

(g) Any defect in the physical condition of the property; or

(h) An obligation on the seller to impose any matters within their knowledge, including any adverse matters or those particularised above in paragraphs (a) — (g).

Read that second list again. A seller can know that the property has extensive termite damage. They can know there are structures at the back of the property that were never approved by council. They can know there has been a running dispute with the neighbour about the fence line for two years. And under the Form 2 regime, they are not required to say a word about any of it.

The regime in plain terms

The Form 2 protects buyers against surprises in the legal title of the property. It does not protect buyers against surprises in the physical condition of the property. Those are two very different things.

The Scenario We Are Seeing

The pattern of enquiries we are receiving is consistent enough that it is worth describing in some detail.

A buyer finds what they believe is their dream home. The asking price stretches them. They obtain finance approval. They review the Form 2 with their conveyancer. The disclosure statement appears clean. They instruct a building and pest inspector. The report comes back with some minor items, a few things to monitor, and nothing alarming. They negotiate, they sign, they settle.

Then, sometime in the weeks or months after they have moved in, they find something.

In one version of this scenario, it is termites. Not a localised issue. An infestation that has been active for years, working through the structural timbers of the home from an entry point created by two unapproved rooms attached to the property. The rooms were built without council approval, without proper moisture barriers, without separation from the main structure. They created the conditions for exactly what happened. The buyer ought to have known the rooms were non-compliant but didn’t say anything.

In another version, it is an encroachment. The fence the buyer assumed was on the boundary is not. It is sitting on the neighbour’s land by a meaningful margin, and the neighbour has known about it for years and has been waiting for new owners to raise it.

In a third version, the sellers, themselves, undertook substantive renovations to the property. None of it was certified or had council approval and now needs to be torn down. None of it was mentioned by the seller.

The common thread in all of them is this: the seller knew. And the Form 2 did not require them to say anything.

The regime tells sellers what they must disclose. It says nothing meaningful about what they must not conceal.

The Gap Between Is and Should Be

The frustration I hear from buyers in this position is entirely legitimate. They engaged professionals. They paid for a building and pest inspection. They instructed a solicitor or conveyancer. They reviewed the disclosure statement. They did what they were told to do.

And yet here they are.

The structural problem with the regime is that it was designed to address a different category of risk. The Form 2 emerged from a recognition that buyers were sometimes ambushed by title-level surprises — unregistered interests, undisclosed encumbrances, and body corporate levies they did not know about. Those are real problems, and the regime addresses them reasonably well.

But the problems driving the bulk of post-settlement disputes are not title problems. They are condition problems. They are things that existed in the physical fabric of the property that the seller knew about and did not volunteer and that a buyer’s pre-purchase inspection did not detect, either because the defect was not visible, because it was concealed, or because the inspection was not sufficiently thorough to find it.

The regime does nothing for those buyers. It never did.

What the regime has done, however, is create a perception of protection that does not reflect the reality. Buyers see a Form 2 disclosure statement; they understand that sellers are now legally required to disclose things about the property, and they draw the reasonable but incorrect inference that the things they would most want to know about:

(a) Is the house structurally sound?

(b) Does it have termites;

(c) Are all the structures approved;

(d) Are there informal disputes or encroachments?

are captured by that document.

They are not.

The disclosure gap in numbers

Under the Property Law Act 2023 regime, a seller who knows their property has structural termite damage requiring remediation works, unapproved rooms or extensions, and a live boundary dispute with a neighbour is required to disclose none of it. The Form 2 they sign will appear entirely clean. The buyer will receive it, review it, and rely on it, reasonably but incorrectly.

What the Law Actually Says

The absence of a disclosure obligation does not mean a seller can do whatever they like. The law of misrepresentation, under common law, operates alongside the statutory regime and, in certain circumstances, catches sellers who remain silent about matters they know about.

But the thresholds matter. And buyers need to understand them clearly.

The General Rule: Silence Is Not Misrepresentation

The starting point at common law is that a vendor is not obliged to volunteer information, even information that would materially affect a buyer’s decision. This is the caveat emptor principle. A seller who stays silent about a defect, while making no representations about it at all, is not automatically liable.

“There is no legal obligation on a vendor to inform the purchaser that they are under a mistake which has not been induced by the act of the vendor.”

That is the baseline. The law of misrepresentation builds on top of it.

Exception 1: The Half-Truth

The most practically significant exception in property disputes is the half-truth doctrine. Where a seller makes any statement about a topic in marketing material, in response to a buyer’s enquiry, or through the way the property is presented, they assume an obligation to say enough to prevent the overall impression from being false.

A statement that is technically true but materially incomplete is treated in law as a misrepresentation.

In the context of the scenario described above, this arises in several ways. If a seller, when showing the property, pointed to the storerooms and described them as storage space or as an additional feature, without mentioning that they were unapproved, that is a half-truth. The buyer forms the impression they are acquiring lawfully constructed structures. The silence about their non-compliant status makes that impression false.

If the seller responded to a buyer’s enquiry about the property’s condition by saying the home had been “well maintained” or that any pest issues had been “dealt with”, without disclosing the current extent of termite damage, that is a half-truth.

If the seller provided an older building inspection report that did not reflect the current state of the infestation, the act of providing that report while remaining silent about subsequently worsening damage creates a classic half-truth.

Exception 2: Active Concealment

Active concealment is more serious. Where a seller takes positive steps to hide a defect, including cosmetic repairs designed to obscure it, the law treats that conduct as a positive misrepresentation, not mere silence.

An authority case is *Anderson v Daniels*. The property had severe cracking problems. Before putting it on the market, the vendors had a plasterer repair the internal wall cracks. When the buyers inspected and noted there were no cracks inside, the seller told them it was because no children had lived in the house. The Court found that the combination of cosmetic concealment and the misleading response to a direct enquiry amounted to a misrepresentation.

In the termite or mould context, the equivalent conduct is work done to the property before sale that had the effect of concealing the extent of the infestation, such as new cladding, fresh paint over affected areas, and new flooring over damaged subfloor timbers. Even where those works were not done with dishonest intent, if they prevented a buyer from discovering on reasonable inspection what the seller knew to exist, the seller’s conduct crosses the line from silence into actionable misrepresentation by conduct.

Exception 3: Statement True When Made, Later Becomes False

A third exception applies where a seller makes a statement during negotiations that is accurate at the time, but circumstances change before settlement. In that situation, the seller has a positive obligation to correct the earlier statement. Continued silence converts the original, innocent representation into a misrepresentation.

An authority is With v O’Flanagan [1936] Ch 575, where a vendor represented the income of a medical practice accurately at the time of negotiations, but by the time of settlement the business had materially declined. The Court held the vendor was under an obligation to correct the earlier statement, and their silence constituted misrepresentation.

Applied to property, if a seller disclosed during early negotiations that no pest issues had been identified but subsequently became aware of an infestation or received a new pest inspection report identifying one, their obligation to correct that earlier statement arose immediately.

The Deceit Threshold: Where the Bar Actually Sits

The critical case on what a buyer must prove in the termite context specifically is Wood v Balfour [2011] NSWCA 382. The sellers had carried out some cosmetic repair of superficial termite damage, but the Court found they were not aware of the structural significance of the underlying infestation. On those facts, the claim in deceit failed.

But the Court was explicit: a seller who is aware that the property has substantial termite damage compromising its structural integrity and who takes steps to conceal that damage from prospective buyers will be held liable for the losses that follow.

The dividing line is knowledge. The seller must have known, not merely suspected or not merely been put on notice, of the structural significance of the damage and chosen, actively or by silence in circumstances giving rise to a reasonable expectation of disclosure, to conceal it.

The law does not require sellers to be their buyer’s building inspector. But it does require them not to lie. And in the right circumstances, silence is a lie.

The Practical Problem No One Talks About

Even where a buyer has a strong legal case, they face a practical problem that is almost never discussed in the commentary on this area.

By the time they discover the issue, they have nothing left.

They have spent the deposit. They have paid stamp duty. They have paid legal fees, moving costs, and the first mortgage repayment. The building and pest inspector’s invoice is sitting on the kitchen bench alongside the engineer’s report they just commissioned to understand how bad the termite damage actually is. The council has confirmed the storerooms are unapproved and will need to be removed or certified.

And now they are being told they need to engage a solicitor, gather evidence, brief an expert, and pursue proceedings against the person who sold them the problem.

The financial and emotional toll of that is not trivial. These are not sophisticated commercial parties litigating over a business transaction. These are families who stretched everything they had to buy a home, who did everything they were told to do, and who are now being asked to find resources they do not have to recover losses that were caused by someone else’s deliberate or reckless silence.

The regime was supposed to reduce this. In certain respects it has. But the gap it has left — between what sellers are required to disclose and what buyers genuinely need to know, remains wide. And it is buyers who fall into it.

The cost of the gap

A buyer who discovers post-settlement termite damage requiring $80,000 in remediation is now facing $80,000 in unbudgeted expenditure. Add expert reports, legal fees, and the cost of temporary accommodation if the property is uninhabitable during works, and the total easily exceeds $120,000. That is the cost of the gap.

Evidence: The Thing That Wins or Loses These Cases

If a buyer is to succeed in a post-settlement claim based on misrepresentation or concealment, the case will almost always turn on evidence. And evidence, in this context, deteriorates quickly.

The seller has moved on. The property is in the buyer’s possession and is being repaired. Works are being done that, however necessary, are altering the physical evidence of the defects. Memories fade. Documents get lost.

The following categories of evidence are critical and should be gathered as early as possible:

1. Pre-sale building and pest inspection reports, including any reports commissioned by the seller before or during the sale campaign;

2. Pest control records for the property, obtainable from prior pest treatment providers and sometimes from council records;

3. Council records for any enforcement actions, building approvals, or complaints relating to the property or its structures;

4. Real estate correspondence, including any email exchanges between the seller, the agent, and prospective buyers;

5. Marketing material for the property — photographs, listing descriptions, anything that formed part of the impression presented to the market;

6. Invoices for any works done to the property in the period before sale, particularly works involving pest treatment, cosmetic repair, or the storerooms themselves;

7. Any statements made by the seller or their agent during inspections, whether documented or witnessed; and

8. The seller’s own insurance claim history for the property, which may be obtainable through the discovery process.

The building and pest inspector who prepared the pre-purchase report will also need to be considered carefully. Whether they failed to identify what was there and why is a separate question, but it may give rise to a separate claim if the failure was below the professional standard expected of them.

What Buyers Should Be Doing

My guidance to any prospective purchaser is this: ask your lawyer or conveyancer to go above and beyond the standard conveyancing process. Yes, you may incur additional costs by way of searches, legal fees, or investigation reports. But those costs are nothing compared to the cost of litigation after the fact.

Specifically:

(a) Commission a thorough building and pest inspection from a qualified inspector, not the cheapest one, but the most thorough one. Brief them specifically on what you want them to look for, including unapproved structures.

(b) Ask the seller direct questions about the property’s condition, in writing, through your solicitor. Ask about termite history, past treatment, whether any building works have been carried out and whether those works were approved.

(c) For any structure on the land that is not the main dwelling, storerooms, garages, sheds, pergolas, or carports, request evidence of council approval before you sign.

(d) Search council records directly for any enforcement actions, notices to comply, or complaints relating to the property.

(e) If the seller or agent makes any representation about the condition of the property, document it. Take notes after inspections. Screenshot listings before they are taken down.

(f) If the seller is reluctant to answer questions about the physical condition of the property, treat that reluctance as a signal worth investigating.

And if you have already settled and discovered an issue that was not disclosed to you, get advice early. Limitation periods apply. Evidence deteriorates. The legal position is not always as hopeless as it feels, but it is almost always time-sensitive.

The regime has not removed the need for buyers to protect themselves. It has just changed the paperwork required before they find out they needed to.

A Note for Sellers

This article is directed primarily at buyers, but sellers and their advisers should read it too.

The existence of the Form 2 regime does not immunise a seller against liability for matters that fall outside it. Misrepresentation under common law continues to operate. Where a seller makes statements about the property’s condition, responds to buyer enquiries, or presents the property in a way that creates a false impression, liability can follow regardless of what the Form 2 says.

Active concealment by covering up defects before marketing, repairing cosmetic evidence of structural problems, and painting over pest damage carries serious risk. The Courts have been clear: a seller who knows of substantial defects compromising the integrity of the property and takes steps to hide them from buyers will be held liable for what follows.

The safest and, frankly, most commercially sensible approach for a seller who is aware of material defects is to disclose them and price accordingly. A disclosed defect is a negotiable item. An undisclosed defect is a lawsuit.

Damon Laffin is the Legal Practice Director at Odyssey Legal, a Queensland boutique litigation and business law firm.

Odyssey Legal is a boutique commercial litigation firm on the Sunshine Coast. We advise businesses on debt recovery, letters of demand, and commercial disputes across Queensland.

07 5370 8759 | info@odysseylegal.com.au | odysseylegal.com.au

This article is general information only and does not constitute legal advice. You should obtain advice specific to your circumstances.