You’ve likely heard the term caveat emptor regularly – and the concept should not be taken lightly. But what exactly is ‘caveat emptor’ and how does it affect you?
We’ll keep the linguistics lesson brief; however, caveat emptor is a Latin term that is now understood as ‘buyer beware’. Most who learnt Latin back at school likely would note the arrangement as ‘let the buyer beware’ and would also be familiar with the more frequently taught counterpart cave canem (beware of the dog).
Its first known use is cited in the Oxford English Dictionary, as being in 1523 in reference to a horse that may be tame and used for riding, or that may be ‘wylde’. The gamble that the buyer of the horse will need to take in this situation is the first case of caveat emptor.
The term also had significant legal standing in the past. Cornell University Law School explains that it’s currently: “A doctrine that often places on buyers the burden to reasonably examine property before purchase and take responsibility for its condition. Especially applicable to items that are not covered under a strict warranty.”
Another counterpart, although not so widely used, is caveat venditor. It sounds as it is – beware seller or beware vendor. It’s less likely you’ve heard this phrase and that's because caveat emptor is now undeniably part of our property culture.
The ‘culture’ of caveat emptor
Caveat emptor is more than just a maxim when it comes to property, it’s widely cited as the way you should approach any transaction. The onus is on the buyer when purchasing property and this dictates that there are certain mistakes or performance expectations that are your problem to deal with.
The notion of taking responsibility for your decisions is crucial in property and in generally being part of a civilised society, however this doesn’t mean that you should be financially disadvantaged by others.
Queensland’s review of property disclosure laws was described as a bid to tackle the buyer beware doctrine.
The International Bar Association (IBA) explain that the rule has consistently been applied across Australia. They noted the example of Kadissi v Jankovic, a case where the purchaser found serious cracks in the external walls of a flat they had bought. They then looked to void the contract and get their deposit returned. The court ruled that they would not be allowed to escape from the contract, despite the vendor undertaking significant work to stop movement in the foundations that they did not disclose.
Despite this, the IBA note that there are certainly situations where caveat emptor does not apply. In most countries across the globe there are protection measures put in place for buyers to assist them from being ripped off by unscrupulous operators.
The key in Australia is that the vendor, or agent acting on their behalf, must not have acted in a misleading or false manner.
This includes express or implied statements that created a false impression about a property’s characteristics, a vendor knowingly disguising or concealing a physical defect in order to mislead and where a known latent defect, flaw, fault or imperfection is not readily observable or discoverable through the exercise of ordinary care.
In certain situations, the buyer may find themselves able to seek a refund of their deposit and to rescind the contract of sale, explains the IBA, turning the situation into one of caveat venditor.
For instance, here are some of the things you would rightfully expect a real estate agent to disclose under current law.
In fact, Queensland’s review of property disclosure laws was described as a bid to tackle the buyer beware doctrine.
"[Taken] as a whole, the Queensland seller disclosure obligations have evolved over a long period of time without any underlying guiding principles, apart from attempting to address the possible information asymmetry arising as a result of the perceived effect of the doctrine of caveat emptor,” explained a report made into Queensland Property Law.
As is clear through the concept of caveat emptor – you’re not on your own. If someone has broken the law or breached an agreement, then there are avenues you can take. However, if you scrimp on your research, fail to undertake necessary inspections or in some other way under prepare, you’ll find yourself head-to-head with the maxim caveat emptor.