There are a few legal terms that fly around when it comes to purchasing a property including the most common term 'section 32'.
What is a 'section 32'?
A Section 32 is a written statement the vendor must sign and give to a purchaser before a contract of sale is signed.
The vendor statement must include certain information about matters that affect the property as listed in section 32 of the Sale of Land Act 1962 - hence the name 'section 32' vendor statement.
An incomplete or inaccurate vendor statement may allow a purchaser the right to avoid a contract once signed.
What information must a vendor disclose in the s32?
The s32 must contain certain details as referenced in s32 of the Sale of Land Act including but not limited to:
Financial matters - information on rates, owners corporation fees, taxes, charges and other outgoings payable on the property so the purchaser is aware of the costs they will be liable for as the new owner of the property.
Details of any easements, covenants or other similar restrictions recorded on the title - so the purchaser is aware of all encumbrances and can consider these restrictions or rules may affect their intended use or development of the property (for example a purchaser's planned renovations or construction of an extension may not be possible if there are water pipes running under the house (recorded on title as an easement) or the purchaser may have planned to subdivide the land and build another dwelling but this is prohibited (by a covenant recorded on title). The vendor must also disclose if they have failed to comply with any easement, covenant or restriction on the title (for example if they have built a garage or other structure over an easement without approval).
Planning Scheme, Zoning and Overlay information – so the purchaser is aware of the rules that may apply to the property when it comes to the development and use of the land, the zoning of the property (residential/commercial/mixed-use/rural etc) and any overlays applicable (parking, heritage, design and development, environmental etc).
Details of building permits issued in the last 7 years (unless the property is vacant land) - so the purchaser is can check any building works completed at the property under such permits have been completed in compliance with the relevant building laws and regulations and the appropriate insurance is in place and so the purchaser can check if the required certificates of final inspection or occupancy permits have been issued.
Owner builder information - if applicable an owner builder defects report and information on any owner builder warranty insurance in place must be disclosed, so the purchaser can make an informed decision about the condition of the property and any defects that may be present.
Owners corporation information – if the property is affected by an owners corporation (previously known as body corporate) the s32 must include a certificate of information and attachments that make the purchaser aware of certain details such as the owners corporation fees that are payable, insurance that has been taken out by the owners corporation (if any) and the rules applicable to all lot owners. A copy of the minutes of the last annual general meeting of the owners corporation must also be provided to the purchaser so they can review the recent decisions of the owners corporation and matters that may have been raised at the meeting (such as decisions on special levies that may be payable in the future which the purchaser will be liable for or building maintenance issues that might impact the purchaser’s use and enjoyment of the property in the future).
Services that are available for connection to the land – so the purchaser is aware of the availability of services that can be connected to the land (electricity, gas, water, sewerage and telephone services).
What is not* included in a vendor’s statement?
The vendor’s statement does not have to provide information about:
The condition of any buildings on the land (other than an owner builder defects report if applicable).
Whether any structures on the land have been built in compliance with applicable building laws and regulations.
Accurate details of the land measurements or location of boundaries on the title plan.
Building plans and specifications.
*Material Facts Disclosure Obligations on Vendors
Recent legislative changes have imposed an obligation on vendors and their agents not to knowingly conceal from a prospective purchaser any material facts about a property that is offered for sale. A vendor or their agent has an obligation to disclose all known material facts, as soon as a purchaser shows interest in purchasing a property if the information they are aware of would influence a purchaser's decision to buy the property.
Material facts include (but are not limited to) the following:
Known defects in the structure of a building on the land, a termite infestation, combustible cladding, asbestos or contamination of the land as a result of prior uses of the land.
The underlying cause of an obvious physical defect that is not readily apparent upon inspection (for example, whilst a large uncovered crack in a wall would be obvious to a purchaser upon inspection, the underlying (perhaps more serious) reason for the crack, such as defective stumping that is known to the vendor may not be known by a purchaser).
The vendor is aware there has been a significant event at the property such as a flood, bushfire, or there is a history of pesticide use at the property.
Known illegal building works i.e. works undertaken without the required building, planning or other required permits or work that were otherwise illegal.
The property during the current or previous occupation has been the scene of a serious crime or an event which may create long-term potential risks to the health and safety of occupiers of the land, such as:
o extreme violence such as a homicide
o use for the manufacture of substances such as methylamphetamine, or
o a defence or fire brigade training site involving the use of hazardous materials.
Due diligence by a purchaser
In addition to reviewing the s32, all purchasers should undertake their own enquiries to fully investigate the property by:
Reviewing the consumer affairs due diligence checklist: https://www.consumer.vic.gov.au/duediligencechecklist
Engaging an experienced property lawyer for advice on the contract and s32.
Obtaining a building and pest inspection.
Asking questions about material facts - make your intentions about the property known to the vendor and ask questions about material facts the vendor may be aware of that would influence your decision to buy the property, ensuring all communication in this regard is in writing.
All information provided is general in nature and does not constitute legal advice, nor is it intended to be taken as legal advice. While all care is taken to ensure information on this website is accurate and current, we make no warranties as to the accuracy or reliability of any information provided. Users of this website must make their own inquiries and must seek their own legal advice specific to their own circumstances and not act or rely on any of the information on this website.