Is mandatory disclosure an effective panacea for buyer beware?

Abstract

Purpose The purpose of this paper is to examine whether mandatory disclosure of information accompanying the sale of real estate achieves its aim of informed purchasers. Design/methodology/approach Using a case study approach focused on mandatory disclosure in South Australia data was collected from interviews and focus groups with key personnel in the property industry involved in the production of information required to fulfil vendors’ disclosure obligations. Findings The authors found that purchasers are ill-served by a long and complex form of mandatory disclosure with a short time frame that prevents the use of the information provided. Without good form design and increased digital affordances provided by the cadastral and conveyancing systems, mandatory disclosure is insufficient to ensure minimisation of information asymmetry between vendor and purchaser. Originality/value To the best of the authors’ knowledge, this is the first Australian qualitative study that examines the utility of mandatory vendor disclosure in real estate sales and the first to consider the impact of the digitalisation of cadastral and conveyancing systems upon the efficacy of mandatory disclosure regimes.