The function of the Vendors Statement or Section 32 Statement is to inform the purchaser of certain particulars about the property. When a purchaser is deciding whether or not to buy a property, they will normally be provided a Section 32 Vendors Statement by the selling agent.
A Vendors Statement is a document prepared by the person selling a property and must be provided to a prospective purchaser prior to them signing the Contract. A Contract of Sale is not enforceable unless a Vendor’s Statement has been provided to the purchaser prior to the purchaser signing any enforceable contract of sale.
The Vendors Statement under section 32 of the Sale of Land Act will include such information relating to rates, zoning, restrictions etc.
Who needs a Section 32 Vendors Statement?
Any Vendor accepting a written offer for the sale of a property is required to produce a Section 32 Vendors Statement. So if you are selling your property, you do. If you intend to sell your property, contact Victorian Property Settlements, and we can prepare your Vendor statement within 1 to 2 hours.
What is a Section 32 Vendors Statement?
A Section 32 or Vendors statement is just that, a statement made by the seller of real estate (vendor) to a purchaser.
Its name comes from Section 32 of the Sale of Land Act, which requires a vendor to provide certain information to a purchaser BEFORE a contract of sale is signed.
Section 32 of the Sale of Land Act was introduced into legislation in 1983 with a general view towards enhancing consumer protection and in doing so substantially extended a vendor’s duty of disclosure. It provides for the pre-contract disclosure required to be made by a vendor.
Prior to the introduction of the vendor’s disclosure statement, it was left to purchasers to make their own inquiries to establish what other matters affected the land. These inquiries had to be completed before a contract was signed. Once a contract was signed the purchaser was obliged to accept the property “warts and all”.
Section 32 of the Sale of Land Act requires pre-contract disclosure of recognised title defects. If a seller of real estate (vendor) fails to properly make proper disclosures to a purchaser a purchaser may elect to avoid any subsequent contract relying on the that vendors statement section 32.
These disclosure requirements are relatively specific and must be complied with by a vendor. A vendor complies with the Act even where additional pertinent information known to the vendor, but not required to be disclosed under the Act, is not included in the disclosure statement.
Naturally, as with all things involving the law, there are exceptions to this rule, and purchasers should not assume that any “technicality” will allow them to end the contract.
Before a contract is signed is the best time to get advice from a qualified and licensed conveyancing professional, as the opportunities to end the contract can be severely limited if this advice is sought after the sale has been finalised.
In recent years, the information required in a Section 32 Vendors Statement has been expanded and extended. Interpretation of the Section 32 requirements, particularly those relating to building works undertaken by an “owner-builder”, can be quite confusing. In addition, failure to comply with some of the rules can attract huge monetary penalties.
What is required in a Section 32 Vendors Statement
Who prepares the Section 32 Vendors Statement?
It should be prepared by a qualified and licensed conveyancing professional.
The Section 32 Vendors Statement should always be prepared by a qualified and licensed conveyancing professional. While this is not stated in the Sale of Land Act, the fact that it is a legal document means that a vendor must be given competent legal advice by a qualified and licensed conveyancing professional in order to understand the responsibilities associated with the preparation of the Section 32 Vendors Statement.
Who must sign the Section 32?
Statement by the vendor
The vendor is the only person who is required to sign the Section 32 Vendors Statement. The vendor may sign personally, or through their legal representative.
Most agents will tell purchasers that they too must sign the Section 32 Vendors Statement. This is not necessary. It is only to protect the estate agent. By having the purchaser sign the Section 32 the agent is able to prove that a copy of the Vendors Statement was delivered to the purchaser BEFORE the contract was signed. This is the one and only reason why purchasers are asked to sign the Section 32 Vendors Statement.
When must the Section 32 Vendors Statement be provided?
The Section 32 Vendors Statement must be provided to a purchaser BEFORE the contract is signed.
Sometimes an agent will have the purchaser sign a contract first, and include a special condition in the contract stating that the sale is subject to the vendor providing the purchaser with a copy of the Section 32 Vendors Statement. In such circumstances the sale is fatally flawed, and the purchaser is entitled to cancel it any vendor should note that although a purchaser can avoid the contract in this circumstance the same may not be so for a vendor.
How the Section 32 is provided
Usually, the Section 32 is prepared by the vendor’s qualified and licensed conveyancing professional, and delivered to the real estate agent. The agent then makes the Section 32 and proposed contract available to purchasers.
What is in the Section 32?
The following is a list of the basic information found in a Section 32. Further information may be required – it depends on the property being sold. (Remember, proper advice from a qualified and licensed conveyancing professional should always be sought regarding the information contained in the Section 32, and what information SHOULD be included).
Basic information in the Section 32 Vendors Statement:
- Statutory warnings to the purchaser S32(1)
- If there is a residence, information regarding building permits issued in the past 7 years S32(1A)
- Particulars of any mortgages or “charges” over the land a copy of a resent title search is normally attached S32(2)(a) & (aa)
- Information regarding covenants, easements and any other restrictions on title (whether or not they appear on the title), things like the use of your land by someone eles to accress their land or restrictions on parts of the land due to drainage pipes S32(2)(b)
- Planning information, particularly where zoning restricts land use S32(2)(c)
- Information regarding rates, Taxes, Charges and Outgoing payable by the owner of the property S32(2)(d)
- If the property is subject to a Growth Area Infrastructure Contribution S32(2)(da)
- If the land is in a bushfire-prone area within the meaning of regulations made under the Building Act 1993 S32(2)(dc) **NEW**
- Particulars of any notice, order, declaration, report or recommendation of a public authority or government department S32(2)(e)
- Details about services connected to the property S32(2)(ea) &
- In the case of any water supply or sewerage service connected to the land that is not of the standard level available in the locality, particulars of the level of service provided S32(2)(eaa)
- Whether there is access to the property by road or not S32(2)(ec)
- Additional information regarding the any mortgage or charge if the sale is a terms contract S32(2)(f)
- Confirmation that the property will or will not remain at the risk of the vendor prior to any settlement S32(2)(i)
- Details of any agricultural restrictions or notices S32(2)(i)
- Details and evidaance of the vendors and his right to sell the property S32(3)
In addition to the above other acts also require certain information to be included in a vendors Section 32 statement these include
- Details of any owners corporation and the require disclosures under Section 151 of the owners cooperation Act
- If the vendor is the owner-builder who completed building works the required written inspection report (which lists any defects) and if needed Particulars of owner-builder warranty insurance under section 137b of the building act
What if the Section 32 is defective?
It is a offence for a vendor to deliberately or recklessly provide false information, or to fail to provide all of the required information.
Where a vendor has failed to comply with the provisions of Section 32, a purchaser may be entitled to end the contract at any time, up until the day of final settlement. This can result in huge costs to a vendor. The vendor may still have to pay a full commission to the estate agent, then a second commission if the property is to be sold again, plus legal costs, plus the cost of the purchaser’s loss.
Of course, there are exceptions. A mere technical breach may not result in cancellation of the contract. Legal advice should be sought before assuming anything with regard to breaches and remedies relating to Section 32 of the Sale of Land Act.