When buying property in Victoria, one of the most important documents a buyer should review before signing a Contract of Sale is the Section 32 Vendor Statement.
Also known as a Vendor’s Statement, the Section 32 provides important information about the property and certain matters that may affect the land.
Understanding what a Section 32 is — and what it does not cover — can help buyers make a more informed decision before purchasing property.
What Is a Section 32 Vendor Statement?
A Section 32 Vendor Statement is a legal disclosure document that a seller must generally provide to a prospective buyer before the buyer signs the Contract of Sale.
The information required in the statement is set out under section 32 of the Sale of Land Act 1962 (Vic).
The statement is usually prepared by the seller’s legal practitioner or licensed conveyancer and must be signed by the seller.
A Section 32 may contain important information about matters affecting the property, including:
- Mortgages
- Covenants
- Easements
- Planning controls and zoning
- Rates and other outgoings
- Notices affecting the property
- Whether the property is located in a bushfire-prone area
- Owners corporation information, where applicable
The information and documents required can vary depending on the circumstances of the property and the transaction.
Why Is the Section 32 Important for Buyers?
The Section 32 can help a buyer identify important legal and financial matters affecting the property before entering into a binding contract.
For example, a buyer may discover that:
- An easement affects part of the land
- A restrictive covenant limits how the property may be used
- There are planning controls that affect the property
- The property is subject to an owners corporation
- There are particular rates, charges or notices affecting the land
These matters may not be obvious from inspecting the property or viewing the house.
Is the Section 32 the Same as the Contract of Sale?
No.
The Section 32 Vendor Statement and the Contract of Sale are separate documents, although the Section 32 is commonly provided with or attached to the Contract of Sale.
The Contract of Sale sets out the terms of the agreement between the buyer and seller, including matters such as:
- The purchase price
- The deposit
- The settlement date
- The parties to the contract
- Special conditions
The Section 32 provides important information about matters affecting the property.
Both documents should be carefully reviewed before a buyer signs a contract.
What Does a Section 32 Not Tell You?
A Section 32 is an important legal disclosure document, but it does not provide a complete inspection of the property.
Generally, a Section 32 does not tell a buyer:
- Whether the building is structurally sound
- Whether the building complies with building regulations
- Whether there are building defects
- Whether the measurements on the title are accurate
- Whether the property has pest problems
- Whether the condition of appliances or fixtures is satisfactory
For this reason, buyers may also need to consider obtaining appropriate inspections and independent advice before purchasing.
A buyer should not assume that a Section 32 replaces a building inspection or other due diligence.
What If the Property Is in an Owners Corporation?
If the property is affected by an owners corporation, additional information may be required.
The Section 32 may need to include an owners corporation certificate and accompanying documents, depending on the circumstances.
This information can be important for buyers of apartments, units and other properties with shared common property.
Buyers should consider matters such as:
- Owners corporation fees
- Special levies
- Rules affecting the property
- Proposed works
- Decisions made by the owners corporation
- Other financial or legal matters affecting the owners corporation
Owners corporation information should be reviewed carefully because the information in a Section 32 may have been prepared some time before the sale.
What Happens If the Section 32 Is Incomplete or Incorrect?
A Section 32 is a legal document and must be factually accurate and complete.
If a Section 32 contains incorrect or insufficient information, a buyer may have rights under the legislation, which can include the ability to withdraw from the sale or take other legal action depending on the circumstances.
The consequences can depend on the nature of the error or omission and the specific circumstances of the transaction.
This is why sellers should ensure their Section 32 is properly prepared and buyers should consider having the document reviewed before signing a Contract of Sale.
Can a Buyer Review the Section 32 Before Making an Offer?
Yes. Where possible, buyers should ask to see the Section 32 and Contract of Sale before making an offer or signing a contract.
A buyer can engage their own legal practitioner or licensed conveyancer to review the documents and explain matters that may affect the purchase.
Reviewing the documents before signing may help identify potential issues early.
Section 32 and Due Diligence
The Section 32 is an important part of the property due diligence process, but it is only one part of that process.
Depending on the property and the buyer’s circumstances, a buyer may also consider:
- A building inspection
- A pest inspection
- Reviewing planning information
- Reviewing owners corporation records
- Confirming property boundaries
- Obtaining appropriate property searches
- Checking whether the property is affected by restrictions or other matters
The appropriate investigations will depend on the property and the circumstances of the purchase.
Common Mistakes Buyers Should Avoid
Signing Before Reviewing the Section 32
A buyer should not assume that the Section 32 is only a formality.
Important information about the property may be disclosed in the document.
Assuming the Section 32 Covers Building Defects
The Section 32 is not a building inspection report.
A buyer should arrange appropriate inspections if they want to investigate the condition of the building.
Failing to Check Owners Corporation Information
For apartments and other properties affected by an owners corporation, fees, special levies and proposed works can be important considerations.
Assuming the Section 32 Is Always Up to Date
Some information, particularly owners corporation information, may need to be checked or updated depending on the circumstances and the time since the statement was prepared.
Signing Without Professional Advice
Property contracts and Section 32 statements can contain important legal and financial information.
Obtaining advice before signing may help a buyer better understand the transaction and identify potential issues.
Frequently Asked Questions
Is a Section 32 Vendor Statement required in Victoria?
Generally, a seller must provide a signed Section 32 Vendor Statement containing the required information and documents before the buyer signs the Contract of Sale. Specific exceptions and requirements can apply depending on the circumstances.
Who prepares the Section 32 Vendor Statement?
The Section 32 is usually prepared by the seller’s legal practitioner or licensed conveyancer, and the seller signs the statement.
Does a Section 32 include building inspection information?
Generally, no. A Section 32 does not replace a building inspection, pest inspection or other investigation into the physical condition of the property.
Should a buyer have the Section 32 reviewed before signing?
Yes. Buyers should consider having the Section 32 and Contract of Sale reviewed by their own legal practitioner or licensed conveyancer before signing.
What happens if a Section 32 is incorrect or incomplete?
Depending on the circumstances, a buyer may have legal rights if the Section 32 contains incorrect or insufficient information. Buyers should obtain advice about their specific situation.
Need Help Reviewing a Section 32 or Contract of Sale?
A Section 32 Vendor Statement contains important information about a property, but understanding the document can sometimes be difficult.
Prox Conveyancing provides professional contract review and conveyancing services for property transactions in Victoria.
If you are buying or selling property, contact Prox Conveyancing for assistance with your Section 32 Vendor Statement and Contract of Sale.
This article provides general information only and is not legal advice. Section 32 requirements can vary depending on the property and transaction. If you are unsure about your rights or obligations, obtain professional advice about your specific circumstances.