If you're buying or selling property in Victoria you'll likely be asked the question: have you got the Section 32? But what is it? In this guide you'll learn everything you need to know about s32 Vendor Statements.
What is a Section 32?
A Section 32 Vendor Statement is a disclosure document that needs to be given to purchasers before they sign a contract to buy real estate. It contains mandatory disclosures about the property required by law.
If this document is not given to the purchaser before they sign the contract, it entitles the purchaser to end the contract at any time before settlement and get all their monies back. So it's very important to prepare one when selling property. And if you're buying property, you need to review it before buying as it contains important information about the property.
I'm a Vendor, do I need to prepare a Section 32 Statement?
Yes. If you want to have a binding contract, you do.
If you don't provide a section 32 statement before your purchaser signs the contract, the purchaser can end the contract at any time before settlement and get all their money back. It's an essential document. Our office can prepare this document for you.
A section 32 example prepared by our office.
What to look for when reviewing a Section 32 in Victoria?
A section 32 statement needs to be carefully reviewed based on how you will be using the land. For example, if you are buying a property to develop it, zoning and any development restrictions will be of great interest for you. If you're buying the property as your home, you will want to know what your annual rates are, if any permits exist for works that have been done, or any material facts that impact the house.
The most common issues our conveyancing solicitors find when reviewing section 32 are generally:
S32 Vendor Statement Issues | Due Diligence Questions |
|---|---|
Restrictions | Are there any restrictions (covenants, s173 agreements, zoning etc.) on title that prevent you from developing or using the land how you want or any notices that will stop the sale from going through unless removed (caveats, charges, mortgages)? |
Title Defects | Does the person on the contract have the right to sell the property? Are all titles included in the sale? Does the plan of subdivision dimensions match the land being bought? Are you buying the correct lot on the plan? |
Rates | What are the annual rates for the property that you will be responsible for? Will the land attract land tax? If commercial, does the commercial and industrial property levy apply? |
Permits and Non Compliant Works | Are there any structures on the land besides the house, if so do they have permits? Have any recent renovations been done, if so, does the s32 contain insurances and permits? |
Owners Corporation | The highest risk reviews often involve owners corporations (apartments/town houses/units). Are there any special levies coming up? Is there any strata loan you will take over? Do the minutes of the last annual meeting foreshadow future issues, costs or litigation (i.e. fixing defective works or flammable cladding). Is the budget in arrears or well funded? |
Services | Are any utilities not connected to the land (water, electricity, gas, communications, sewage). If no sewage, is there a septic tank? |
Leases | Is there a tenant in the property? If so, is there a proper agreement in place that notes rent etc. If commercial, is there a disclosure statement and have the lease terms been renewed correctly? |
What must be included in a Section 32 Vendor Statement?
The Vendor statement must include all information outlined in sections 32A to 32I of the Sale of Land Act 1962 (Vic), being:
- Title search and plan of subdivision, which shows the owner of the property and location and dimensions of the land.
- Any restrictions on the property title, like mortgages, caveats, restrictive covenants, easements, government notices or charges etc.
- Financial matters about the annual rates, taxes, owner’s corporation fees or other costs charged to the land like GAIC levies.
- Planning schemes that affect the property, like bushfire prone area, zoning etc and road access details.
- Notices or orders on the land given by any Public Authority or Government Department
- Services that are connected to the property: electricity, gas, water, telephone, sewage (or if no sewage, details of the septic tank).
- Building permits issued in last 7 years.
- Details of any owner-builder works in last 6.5 years.
- Any applicable insurance details, such as owner builder insurance or building insurance (if contract says property is purchaser's responsibility from day of sale).
- Information regarding any owner’s corporation that affects the property.
- Due diligence checklist.
- Any material facts about the property.
It's important to carefully review your s32 Vendor Statement.
What happens if I don't provide a Section 32 in Victoria to purchasers or if it's misleading?
If you don't provide the vendor statement at all, your purchaser can end the contract at any time and get all their monies back. If you're using a real estate agent to sell your home, their commission may still be payable in this circumstance, so you must have it before you sell.
If your Section 32 is misleading or deceptive, it also gives the purchaser the opportunity to end the contract depending on the circumstances. It may also open you up to litigation risk after settlement depending on the severity of the matter. The safest approach to preparing these documents is to make full and frank disclosure.
Who prepares the Section 32 Disclosure Statement?
Your solicitor will prepare your section 32 statement for you. This is one of the first things you need to do before putting your property on the market as no purchaser will want to buy your property until they review the document. It is recommended you get one prepared as soon as possible. Our office can assist you with this.
How long is a Section 32 valid for?
Your section 32 will be valid until any information within it change and need updating. The general rule of thumb is that you should update your section 32 when new rates are levied, permits issued, title details change, material fact occurs, or annual general meeting for your owners corporation occurs. For example for a standard free-standing house, if nothing material has changed, it will be valid until the end of the financial year when new rates are issued.
How much does a section 32 cost to prepare?
Most section 32 statements are prepared on a fixed fee basis. Its cost will depend on the amount of certificates required to be ordered. Houses require less certificates, whereas apartments require more due to owners corporation certificates. Please contact our office for a quote for a fixed fee preparation cost.
Need help preparing or reviewing a Section 32?
Our property solicitors can help you prepare or review your section 32 for your conveyancing transaction. Feel free to call us on 03 9708 5564 or reach out via the contact form for a quote and to get started.
Disclaimer: The information in this post concerns Victorian law and should not be relied upon for legal advice, but is general in nature. Please contact our office for advice for your circumstance.