A Guide For Buyers and Sellers
What is a Section 32 document?
A section 32 vendor statement refers to the legal document given by the seller to the potential buyer. Essentially, this document contains all the information about the property that is required by law that the seller must provide to the buyer. It must include all the information that may affect the state of the property, especially where such information may affect the decision of the buyer.
The name of the document comes from the legislation that governs the vendor statement, section 32 of the Sale of Land Act of Victoria. The statement should not be confused with the contract of sale, which is a separate document.
Call us on 1300 932 738Table of Contents
- What is the Section 32?
- Why is a section 32 vendor statement important?
- What does a section 32 vendor statement look like?
- Who needs to sign a section 32 vendor statement?
- Seller and the section 32 vendor statement
- Why is the section 32 vendor statement important for the seller?
- When must the section 32 vendor statement be provided?
- What must be disclosed in the section 32 vendor statement?
- What happens is the section 32 vendor statement is found to be defective?
- What are the steps to draft a section 32 vendor statement?
- How do you read a section 32 vendor statement as a seller?
- Do I need a lawyer to prepare the section 32 vendor statement?
- Do I still need a section 32 vendor statement in a private sale?
- Buyer and the section 32 vendor statement
- Why is the section 32 vendor statement important for the buyer?
- When can the buyer expect the section 32 vendor statement to be provided?
- What documents does the seller not need to provide in a section 32 vendor statement?
- What happens if the section 32 vendor statement is missing certain documents?
- What if the seller refuses to provide a section 32 vendor statement?
- What happens if the section 32 vendor statement is found to be defective?
- How do you read a section 32 vendor statement as a buyer?
- Do I need a lawyer to look through the section 32 vendor statement?
- What other documents are important when buying a property?
- What about private sales?
Why is a section 32 vendor statement important?
The section 32 vendor statement provides the buyer with important information about the state of the property. Legislation dictates that the seller must bring certain matters to the attention of the buyer about the property. So being a legal requirement, there are severe consequences if a section 32 vendor statement is not provided or is found to be incomplete or defective.
For the seller, an incomplete or defective section 32 vendor statement may mean that the buyer may have cause to walk away from the transaction. But where a section 32 vendor statement is accurately provided, the seller has the right to enforce the Contract against the Purchaser, including retaining the deposit after the cooling off period expires if the Purchaser decides to walk away from the transaction.
For the buyer, reviewing the section 32 vendor statement is extremely important. A defective or incomplete section 32 allows a buyer to walk away from the deal, while an accurately provided section 32 vendor statement will provide important details about the particulars of the property and its state. A close review is recommended so that the buyer is not surprised by matters affecting the property.
Getting legal advice from a lawyer can assist with ensuring a thorough review of the section 32 vendor statement for the buyer. Similarly, a qualified lawyer can ensure the seller prepares a section 32 vendor statement that complies with the legislation.
What does a section 32 vendor statement look like?
Although the name may sound like one document, the section 32 vendor statement is actually made up of a number of different documents about the property. Essentially, the vendor statement is a full disclosure of all matters relating to the property that the buyer must be made aware of.
Some documents that may form part of the section 32 vendor statement include:
Vendor’s details
This part of the section 32 vendor statement includes the contact number, address and other particulars of the seller.
Title document
The title document shows that the seller legally owns the property and has the authority to sell it. The title also includes details of the property itself (whether it’s a block of land, apartment, house or something else as well as other charges and restrictions on the land).
Mortgages or other charges on the property
Mortgages and charges are reflected in the title document and show the debts and liabilities over the property. You can also see the priority of the mortgages and charges, as they will be listed in order.
Covenants, easements or restrictions on the land
Restrictions on the land like covenants and easements are also found on the title document. Covenants refer to certain things that the land cannot be used such as building guidelines that the owner needs to comply with for while easements refer to a thoroughfare of some sort that is available to the public or certain parties.
Owner-builder warranty insurance
Where the liability of the owner passes onto the buyer before settlement, it is important to ensure the owner-builder warranty insurance is also provided.
Zoning certificate
A buyer may want to know whether they can use the property in the way they wish. The zoning certificate will show the buyer what the property can be used for – residential versus commercial.
Outstanding debts
This relates to any outgoings on the property including rates.
Owners Corporation Certificate
Where the property is an apartment or unit, it is important to include the Owners Corporation Certificate as that will give the buyer a sense of whether the body corporate is in deficit or surplus as well as a sense of the fees and charges associated with the maintenance of the complex. The strata report will also give details of any restrictions like whether pets are allowed and any legal matters that be affecting the property.
The legislation provides a comprehensive list of documents that must be provided in the section 32 vendor statement by the seller. A lawyer can assist in compiling or reviewing the section 32 vendor statement.
Who needs to sign a section 32 vendor statement?
As the name suggests, the vendor statement is prepared by the vendor, that is, the seller. And it is the seller who will then need to sign the document before serving it on any person interested in buying the property.
Some real estate agents may also require that the buyer sign the section 32 vendor statement as proof that the statement was in fact provided by the agent.
Due to the legal nature of the section 32 vendor statement, it is recommended that the seller have the document prepared by a lawyer or conveyancer.
Do all properties require a section 32 vendor statement?
For any property that goes to market in the state of Victoria, whether rural or city, a section 32 vendor statement must accompany the contract of sale. The document is separate and in addition to the contract of sale. The buyer should receive both documents in a property for sale.
Seller and the section 32 vendor statement
Why is the section 32 vendor statement important for the seller?
The section 32 vendor statement is required by law and failure to provide it may give the buyer the option to walk away or invalidate the sale entirely. The statement is a disclosure document that contains a range of attachments that provide information to the buyer about the condition of the property. Such information includes title search, statutory warnings, mortgages as well as other charges on the property and zoning requirements.
When must the section 32 vendor statement be provided?
The section 32 vendor statement must be provided to any interested party before any contract is signed. Generally, a lawyer will prepare the section 32 vendor statement to ensure it complies with the legal requirements. They will then provide it to the real estate agent handling the sale of the property.
It is advisable for the seller to prepare the section 32 vendor statement before taking the property to market. This is because as soon as a buyer is interested in the property, the section 32 vendor statement must be provided. By preparing the statement early on, the seller can ensure there is no delay with the sale process, especially when a buyer is found almost immediately.
What must be disclosed in the section 32 vendor statement?
According to legislation, there are a number of aspects that must be disclosed about the condition of the property in a section 32 vendor statement to the buyer before any contract is entered into. The information provided in a section 32 vendor statement can affect the buyer’s decision as to whether to purchase the property. all information required by law needs to be included in the section 32 vendor statement.
Some examples of what must be disclosed in the section 32 vendor statement include:
Title document
This shows the seller’s legal title to the property and authority to sell.
Particulars of any mortgage – registered or unregistered
These are generally listed on the title document of the property.
Any other charges over the property
Other debts or liabilities that affect the property.
Rates, taxes, charges or other similar outgoings
The seller must provide details of the outgoings on the property to the buyer.
Insurance details of the property
Where the liability falls to the buyer prior to settlement, insurance details must also be communicated by the seller if the property was built in the last 7 years.
Details of any easements, covenants or other restrictions
These particulars can be found on the title document.
Applicable planning schemes
Any government planning proposal that are known must be disclosed to the buyer.
Particulars of notices, orders, declaration, or other approvals by government of changes that may directly or indirectly affect the land.
Some of the above examples may not apply to your property of interest and may not be included in the section 32 vendor statement. On the other hand, there may be other matters that affect the condition of your property that may need to be disclosed. It is advisable to speak to a property lawyer or conveyancer to ensure that as the seller, you have all matters covered to meet the legislative requirements of the section 32 vendor statement for your particular property that you wish to sell.
What happens if the section 32 vendor statement is found to be defective?
The bottom line is, where a section 32 vendor statement is found to be defective, the buyer may be entitled to end the contract without any financial penalty. Whether the defect is enough to constitute ending of the contract is still a question that needs to be carefully considered. If you are the seller and the buyer is of the view that the section 32 vendor statement is defective and wishes to rescind the contract, you may want to seek legal advice as there are exceptions to the situation.
Where you as the seller have given incorrect information intentionally, this can actually constitute a criminal offence. So in providing the section 32 vendor statement, you need to ensure that the information you provide is accurate and not deliberately misleading.
Deliberately providing incorrect information can also open you up to civil claims from the buyer under the Competition and Consumer Act (previously known as the Trade Practices Act) or the Fair Trading Act.
What are the steps to draft a section 32 vendor statement?
Due to the risk of a defective section 32 vendor statement, it is advisable to get a professional to prepare it for you. A lawyer or conveyancer will be familiar with the requirements of a section 32 vendor statement and will have their respective checklists to ensure compliance with the legislation.
The time it takes to prepare a section 32 will depend on the particular property and the various reports that pertain to its condition and state.
As the seller, any information you have in relation to the status or condition of the property will be helpful when preparing the section 32 vendor statement. Before starting the drafting of the section 32 vendor statement, gather any documents relating to the mortgage, charges or outgoings of the property. This will speed up the process to some extent.
Where a qualified lawyer or conveyancer is preparing the statement for you, they may be able to find the information through searches and inquiries.
Nevertheless, it will be helpful if you are able to provide an honest condition of the property through documentation.
How do you read a section 32 vendor statement as a seller?
As the seller, you need to ensure that the documents you attach as part of the section 32 vendor statement are accurate and the buyer will be able to access them. There are many factors that will not be apparent during an inspection alone so you should ensure your section 32 vendor statement provides clarity and covers aspects that the buyer must know about under the law. For instance, services that are connected to the land, zoning particulars, government proposals and so on.
The section 32 vendor statement is also beneficial for the seller as it acts as a safeguard once the cooling off period ends so the seller is able to retain the deposit where the buyer decides to not go through with the sale.
You will need to sign the section 32 vendor statement so ensure you are aware of what it contains.
Do I need a lawyer to prepare the section 32 vendor statement?
Due to the critical nature of the section 32 vendor statement and its legal consequences, it is advisable to request a lawyer to prepare it. Where a section 32 vendor statement is found to be defective, there can be serious consequences to the sale and the buyer may in fact be able to walk away. For these reasons, it is best to engage a professional from the outset.
Lawyers and conveyancers prepare section 32 vendor statements day in and day out so are well positioned to draft an accurate document without taking too much time. Having a lawyer or conveyancer draft the document will also allow you to ensure you understand your obligations as the seller and feel satisfied that all relevant requirements have been met.
Do I still need a section 32 vendor statement in a private sale?
Regardless of whether you use a real estate agent or not to handle the sale, you are required by law to provide a section 32 vendor statement. So it is best to engage a lawyer from the outset and start the process. Any buyer worth his or her salt will ask for the section 32 vendor statement. You want to be prepared and ensure a good sale is not hindered by lack of organisation.
Buyer and the section 32 vendor statement
Why is the section 32 vendor statement important for the buyer?
Upon inspecting a property, there are many aspects that are not immediately or obviously apparent. As such, the law requires the seller to disclose certain matters to the buyer so that they can make an informed decision about the purchase of the property.
The section 32 vendor statement is required by section 32 of the Sale of Land Act and must disclose all particulars that may affect the property in question.
When can the buyer expect the section 32 vendor statement to be provided?
The section 32 vendor statement must be provided to the buyer before signing of the contract of sale. Good practice is to provide the statement when an interested buyer approaches the agent.
What documents does the seller not need to provide in a section 32 vendor statement?
Under the legislation, the seller is required to disclose a number of items as part of the section 32 vendor statement. However, this does not mean they must disclose everything under the sun. There are some things that the buyer may need to undertake on their own accord. For instance, a section 32 vendor statement will not include a building report or pest inspection.
It is best to get a lawyer to review the section 32 vendor statement from the seller as each property is different and there may be additional searches or inquiries you may need to make as the buyer.
What happens if the section 32 vendor statement is missing certain documents?
The requirement to provide all documents required by section 32 is mandatory and there are no ifs or buts about it. The seller must provide all relevant documents. As the buyer, you want to ensure that the section 32 is complete and not defective. In the event that the section 32 vendor statement is missing certain documents, you can make further enquiries. Essentially, a defective or incomplete section 32 vendor statement gives the buyer the right to walk away from the purchase.
However, simply because a section 32 vendor statement is incomplete, you may not want to walk away. You can make enquiries and request that the seller provide you the missing documents. Having a qualified lawyer assist you in reviewing the section 32 vendor statement will ensure that you make an informed decision with all documents at hand.
What if the seller refuses to provide a section 32 vendor statement?
Where the seller does not provide a section 32 vendor statement, you do not have to proceed with the transaction. As a section 32 vendor statement is a requirement under the law, the seller will not be able to market his or her property without a section 32 vendor statement.
In the event the seller continues to refuse to provide the section 32 vendor statement, you can speak to a lawyer about potential solutions. But whatever you do, do not commit to the property without seeing the section 32 vendor statement. You may be absolutely in love with the property but this doesn’t mean you forget to exercise caution. A section 32 vendor statement is a critical document and will provide you with a lot of information that will not be apparent from a single inspection, not to mention the promises from the seller.
What happens if the section 32 vendor statement is found to be defective?
As the buyer, any defect in the section 32 vendor statement means you will be able to leave the contract without any financial penalty. But you should speak to a lawyer first before you decide to walk away as there are exceptions to the situation. In fact, whether the defect is enough to constitute ending of the contract is still a question that needs to be carefully considered.
On another note, where the seller has given you incorrect information intentionally, this can actually constitute a criminal offence. This may open up civil claims for you as the buyer under the Competition and Consumer Act (previously known as the Trade Practices Act) or the Fair Trading Act.
How do you read a section 32 vendor statement as a buyer?
As the buyer, you need to ensure that the documents that are attached as part of the section 32 vendor statement are accurate and you can easily access them. There are many factors that will not be apparent during an inspection alone so you should ensure the section 32 vendor statement provides clarity and covers aspects that you want to know about under the law. For instance, services that are connected to the land, zoning particulars, government proposals and so on.
The last thing you want is to sign the contract and put down your hard-earned deposit, only to learn that there is a massive issue with the property. So read the details and if you think you’re missing something from the section 32 vendor statement, ask the seller. Because pursuant to the law, the seller must provide you with all relevant documents required by section 32 of the Sale of Land Act of Victoria.
The copy of the title document is one of the very important documents that make up the section 32 vendor statement and is evidence that the seller in fact has the legal authority to sell the property. The title document will also contain any mortgages or charges over the property. If the property is being rented out, the section 32 vendor statement must also contain a copy of the existing lease agreement.
Do I need a lawyer to look through the section 32 vendor statement?
If this is your first home purchase or even if you have bought properties before, it is always advisable to obtain legal advice from a lawyer and to have them review the section 32 vendor statement. Buying a property is a big commitment and if you are unfamiliar with the legislative requirements, you may commit yourself to a contract that you don’t completely understand.
By engaging a qualified lawyer well-versed in property matters, you will be able to ensure that the seller has provided all appropriate documents and you are able to make an informed decision of whether you wish to continue with the purchase and hand over the deposit.
What other documents are important when buying a property?
The section 32 vendor statement will provide you with a number of documents that will give you a more thorough understanding of the property and its state.
In terms of other documents that are important when buying a property, there are many. To give you an understanding of what they may, here is an outline so you can watch out for these elements in the section 32 vendor statement:
Outgoings
Legally, the seller is required to provide you an approximate figure of the outgoings associated with the property. This may include any rates, taxes or charges. As the buyer, this will ensure you are able to allow for the additional monies.
Zoning certificate
To ensure you can use the property for the purpose you wish to use it, the section 32 vendor statement must also include a zoning certificate. If you are looking to buy a residential property, make sure you confirm on the zoning certificate that the property is fit for residential purposes.
Building permits
These permits are important where renovations or other work has been carried out within the property in the past seven years. The works may be complete, taking place or about to take place. In any event, you need to check the section 32 vendor statement to confirm that the works were in fact approved and building permits were obtained.
By ensuring you have the relevant building permits, you can be assured that the works are being carried out legally and if you are asked questions later by council or other similar departments, you have the paperwork to show the works were carried with the appropriate permissions. At the end of the day, the onus will be on you as the new owner.
If you find that these building permits are missing, you have the right to make additional enquiries from the seller as this is a legal requirement to provide.
Owners corporation certificate
A body corporate certificate must be included in the section 32 vendor statement if the property is an apartment, unit or townhouse. Also known as a strata report, the Owners Corporation certificate will provide you with a snapshot of the communal outgoings for the upkeep of the complex. The certificate will also include any council and water rates.
Special rules concerning the use of the property is another aspect of the certificate including whether pets are allowed, protocol as to hanging laundry on balconies and what type of renovation works are allowed to be undertaken.
Meeting minutes of Owners Corporation meetings will also be included as well as any future plans for refurbishment of the complex. An important part of the certificate that you should pay attention to is whether there is enough funding to undertake the proposed works. In the event that there isn’t, owners within the complex may be required to increase their body corporate fees.
A body corporate certificate is a key document if buying into a complex.
There are many other documents that also form part of the section 32 vendor statement and as the buyer you need to review them all carefully. Consulting with a lawyer to undertake the review is highly recommended.
What about private sales?
Any property that is being sold in the state of Victoria must be accompanied by a section 32 vendor statement. Even if a real estate agent is not involved, the seller must still provide a section 32 vendor statement. If one is not provided, ask for it. And if the request is declined, it is better you not proceed with the sale, no matter how much you may love the property.
This article is provided for general information purposes only. Its content is current at the date of publication. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice based on your specific circumstances before taking any action concerning the matters discussed in this article.
