A Private Lender’s Guide to Queensland Seller Disclosure When Buying a Home20 min read

Introduction

Since 1 August 2025, property law in Queensland requires a mandatory seller disclosure from anyone selling a home. This scheme, introduced under the Property Law Act 2023 (‘Property Law Act‘), aims to provide a buyer with key information before a contract of sale is signed. However, the standard disclosure documents do not cover all critical risks, leaving significant gaps regarding issues like flood history, natural hazards, and the structural soundness of a new property.

For private lenders and those buying a home in Queensland, this means the provided seller disclosure is only the starting point for legal due diligence. This article provides guidance on conducting a thorough property inspection and risk assessment, including creating a settlement readiness checklist, managing disclosure defects discovered before settlement, and the importance of proper loan structuring and documentation to protect your investment.

Interactive Tool: Check for Risks in Your QLD Property Disclosure & Due Diligence

Understanding the New Queensland Seller Disclosure Scheme

What a Seller Must Disclose in Queensland

Under the Property Law Act, a seller of a home in Queensland must provide a buyer with a comprehensive disclosure statement before a contract of sale is signed. This scheme, which commenced on 1 August 2025, requires the seller to provide key information about the property’s title, planning status, and any known notices affecting the land. Furthermore, the disclosure statement must include specific details organised into several parts:

• Title and Encumbrances: This includes a current title search, details of any registered encumbrances like mortgages or easements, and information on any unregistered leases or agreements that affect the property.
• Land Use and Planning: The seller must disclose the property’s zoning, any notices received about proposed transport infrastructure, and whether the land is listed on the contaminated land or environmental management registers.
• Building and Structures: Information about any notices issued under the Queensland Building and Construction Commission Act 1991 (‘Queensland Building and Construction Commission Act‘), the Building Act 1975 (‘Building Act‘), or the Planning Act 2016 (‘Planning Act‘) must be included. In addition, if there is a pool, its compliance must be addressed.

In addition to the disclosure statement, the seller must also provide the buyer with several prescribed certificates. These documents can include:

• a title search and survey plan;
• a pool safety certificate if applicable; and
• for properties within a community titles scheme, a body corporate certificate and the community management statement.

Critical Information Not Included in the Seller Disclosure Documents

While the seller disclosure scheme provides important information, it does not cover all potential risks associated with buying a home in Queensland. Therefore, a buyer should be aware that a seller is not legally required to disclose several critical details in the mandatory disclosure documents. Significant information that a seller does not need to include is as follows:

• Natural Hazard History: A property’s flood history or its location in an area prone to landslides or storm tides is not a mandatory disclosure item.
• Structural Soundness: The seller is not required to provide any information about the structural condition of the buildings on the property.
• Pest Infestations: The presence of termites or other pests does not need to be disclosed.
• Building Approvals: Information regarding previous building or development approvals is not a required part of the disclosure.

Because these crucial details are omitted, it is vital for any buyer or lender to conduct their own thorough due diligence, including a building and pest inspection and specific flood searches. However, while a seller is not required to volunteer this information, under consumer law they must not mislead a buyer if asked a direct question, for instance, about whether the property has previously flooded.

Due Diligence Beyond the Disclosure Statement for Lenders & Borrowers

The Importance of Flood & Natural Hazard Searches for a QLD Property

When buying a home in Queensland, the seller disclosure documents will not provide information on the property’s history with natural hazards. Under Queensland property law, a seller is not required to disclose if a property has been affected by flooding, landslides, or storm tides. Therefore, this places the responsibility on the buyer and their lender to conduct independent checks to understand these critical risks before a contract is signed.

A thorough due diligence process should investigate several types of natural hazards that can affect a Queensland property, including:

• river and creek flooding;
• overland flow;
• coastal storm tide inundation; and
• landslides.

Failing to investigate these risks can expose a buyer to significant financial and safety issues. For example, a couple in the Scenic Rim unknowingly built their home in an area with a long history of landslides, which later caused substantial damage to their property.

Conducting specific searches for these hazards is vital because the findings can have serious consequences for a new property owner, including:

• Planning and Development Restrictions: A property located in a flood or hazard overlay may have strict limitations on future renovations, extensions, or redevelopment.
• Costly Mitigation Works: Council may require expensive engineering solutions or specific building standards for any new construction to reduce the risk of damage.
• Reduced Property Value: The presence of a known natural hazard risk can negatively affect the property’s market value and make it more difficult to sell in the future.
• Safety and Repair Risks: Unidentified risks from flooding or land instability can lead to costly repairs and pose a direct threat to the safety of occupants.

Assessing Insurance Viability & Costs Before the Contract is Signed

The presence of a natural hazard risk, such as a property being included in a council flood map, directly impacts the availability and cost of property insurance. This is a critical financial consideration for any home buyer securing a home loan, as well as for the lender whose asset is the security. Ultimately, an inability to obtain affordable insurance can place the entire property sale at risk.

Insurers determine premiums using their own risk models and unique datasets that go beyond council flood maps, assessing risk at an individual address level. This means that even if a home in Queensland has never flooded, a change in mapping or the insurer’s risk assessment can cause premiums to rise significantly. As a result, it is essential for a buyer to get an insurance quote before the contract is signed.

Leaving insurance arrangements until after the contract is unconditional can lead to unwelcome financial surprises. For a first home buyer, an unexpectedly high premium can strain their household budget and affect their ability to service the home loan. Furthermore, for lenders, high-cost or unavailable insurance increases the risk associated with the asset, as the property may be left unprotected in a natural disaster.

The experiences of homeowners in North Queensland following flood events highlight the challenges that can arise. Many residents faced long delays in repairs and disputes over claims, underscoring the importance of understanding insurance coverage and costs from the very beginning of the purchasing process.

A Lender’s Settlement Readiness Checklist for a Queensland Property Sale

Verifying the Seller Disclosure Statement & Prescribed Certificates

Before advancing funds for a home in Queensland, a crucial first step is to confirm the seller has complied with the disclosure scheme under the Property Law Act. The buyer must receive a completed seller disclosure statement and all prescribed certificates before the contract of sale is signed. Therefore, lenders should ensure these documents are carefully reviewed for any inaccuracies or omissions.

Under Queensland property law, if a seller provides inaccurate or incomplete disclosure documents, the buyer may have the right to terminate the contract at any point up to settlement. This right exists if the issue is material and the buyer would not have entered the contract had they known the correct information. Ultimately, verifying these documents helps mitigate the risk of a last-minute contract termination.

The disclosure documents must include a range of prescribed certificates. Depending on the property, these may include:

• A current title search and survey plan;
• A pool safety certificate if there is a pool on the lot; and
• A body corporate certificate and community management statement for properties in a community titles scheme.

Conducting Independent Property Law Searches & Inspections

The seller disclosure statement does not cover all potential risks associated with buying a home in Queensland. For instance, Queensland property law does not require a seller to disclose a property’s flood history or if it is located in a flood-prone area. As a result, a buyer must undertake their own independent enquiries to gain a complete picture of the property.

For any property sale, conducting thorough due diligence beyond the seller’s disclosure is essential. Furthermore, these independent checks are vital for identifying issues that could impact the property’s value, insurance costs, and future development potential. A prudent lender’s checklist before settlement should include:

• Checking planning overlays: This involves reviewing council maps to see if the property is affected by flood, storm tide, or other overlays that could restrict future renovations or extensions.
• Obtaining an early insurance quote: An insurance quote for the exact address should be secured before the contract becomes unconditional, as a property’s location in a high-risk area can lead to significantly higher premiums or limited insurance availability.
• Ordering specific flood searches: Since flood searches are not typically included in standard conveyancing, they must be specifically requested to provide detailed information on risks like river flooding, overland flow, and storm tides.
• Matching inspections to intended use: The buyer should arrange inspections relevant to their plans for the property, such as a building and pest inspection that specifically looks for past water damage or structural issues.

How to Manage Disclosure Defects Discovered Before Settlement

Understanding Your Legal Rights When Disclosure is Inaccurate

Under the Property Law Act, a buyer in Queensland has specific legal rights if a seller fails to meet their disclosure obligations. If a seller provides inaccurate or incomplete disclosure documents, the buyer may be able to terminate the contract of sale at any time before settlement. Furthermore, this right applies even if the error was unintentional.

For a buyer to terminate the contract due to an inaccurate disclosure, they must be able to demonstrate three key points, as follows:

• The inaccurate or missing information was a material issue;
• The buyer was not aware of the correct information when they signed the contract; and
• The buyer would not have entered into the contract of sale had they known the truth about the issue.

Strategic Options for Lenders & Borrowers to Rectify Issues

Discovering a defect in the seller disclosure or through independent searches does not automatically mean the property sale must be terminated. Instead, an unsatisfactory search result, such as the identification of a flood risk, can prompt further investigation to understand the full scope of the issue before making a final decision.

When a potential defect is found, a buyer or their lender can take several practical steps to gather more information. Ultimately, these actions help in making an informed choice about whether to proceed with the purchase or exercise a right to terminate the contract. These steps include:

• Targeted Inspections: A building and pest inspection can be arranged to specifically look for evidence of past damage related to the discovered risk, such as water damage from previous flooding.
• Insurance Enquiries: Contacting an insurer with the new information allows the buyer to get an accurate premium quote and understand any limitations on coverage for the property.
• Planning Advice: A town planner can be consulted for advice on planning and environment laws to clarify how the issue might affect future development, such as restrictions on renovations or extensions.

Drafting Loan Conditions to Protect Your Home Loan

Making Your Home Loan Conditional on Disclosure Sufficiency

For private lenders, who must stay aware of ongoing regulatory changes for non-bank lenders, a key strategy to manage risk when financing a home in Queensland is to make the home loan conditional on the sufficiency of the seller disclosure. This involves drafting a special condition into the loan agreement that links the advance of funds to the lender’s satisfaction with all due diligence outcomes. Ultimately, this approach mirrors the protection a buyer can secure in a contract of sale.

Just as a special condition in a property sale contract can give a buyer the right to terminate based on unsatisfactory flood searches or other due diligence, a similar clause in a loan agreement protects the lender. Furthermore, it ensures that funds are not released until the lender has reviewed the seller disclosure statement and is satisfied that no material risks to their security have been identified through independent searches and property inspection.

Key Clauses to Include in Loan & Mortgage Documents

To protect their investment, lenders can incorporate several key clauses into their loan and mortgage documents for a Queensland property. These clauses are designed to address the gaps in the mandatory seller disclosure scheme under the Property Law Act. As a result, specific clauses can provide an additional layer of security for the lender, including:

• The right to verify disclosure: This allows the lender to independently check the information provided in the seller disclosure documents to confirm its accuracy and completeness before the property sale settles.
• The ability to withhold funding: A clause can give the lender the discretion to withhold advancing the loan if their due diligence uncovers a material risk, such as the property being in a flood overlay, that could impact its value or insurability.
• A requirement for borrower cooperation: This ensures the borrower must facilitate any necessary due diligence, including providing access for a building and pest inspection or ordering specific searches requested by the lender.

Conclusion

When buying a home in Queensland, the mandatory seller disclosure provides a starting point, but it is not a complete risk assessment, as critical details like flood history are not included. For any buyer or private lender, a thorough property inspection, independent searches, and carefully drafted home loan conditions are vital to making an informed decision before a contract of sale becomes final.

To ensure your investment in a new property is properly protected, contact GRM Law’s experienced private lender and non-bank finance lawyers for specialised legal advice. Our team assists private lenders and those buying a home in Queensland to manage their due diligence and structure loan documents that safeguard their interests.

Frequently Asked Questions