A Section 32 statement is also known as the Vendor’s Statement. We briefly touched on the Section 32 when we wrote for buyers and sellers, and in this article, we’ll take a closer look at the Section 32 based on the many questions we receive about it.
Why do we call it Section 32?
The name of the Section 32 statement comes from Section 32 of the Sale of Land Act 1962, which sets out the information that must be included in a property contract.
The Section 32 is effectively a legal declaration by the vendor that must be factually accurate and complete with sufficient information and certificates, such as outgoings, easements and declaration if located in a Heritage area. This Section 32, or Vendor’s Statement, is appended to the Contract of Sale.
Why is Section 32 important to buyers and sellers?
For buyers: Some aspects of a property are not immediately apparent on face value when inspecting a property. The Section 32 document ensures that sellers must disclose certain matters as required, and this information may be crucial for buyers when they’re making a decision about the property. A common example, is any covenants on the title, which sets out restrictions for the property. These covenants on title may impact how much you can do to the property if you want to renovate.
For sellers: Sellers must provide the Section 32 statement under legal requirements, which will be an attachment of the contract of sale. A completed Section 32 statement must include necessary certificates and documents, such as register search statement, property report. A Section 32, along with the Contract of Sale will be prepared by your conveyancer and provided to potential buyers before the sale or auction.
What are the risks of getting this wrong?
For buyers: As a purchaser of the property, the principle of “caveat emptor” plays an important role. This latin term means the responsibility of checking the documentation and the property sits squarely with the purchaser. A purchaser will have very limited negotiating power once a contract has been signed as the onus is on them to satisfy themselves once all information has been disclosed and made available. For example, if a client signs a Section 32 that has two Owner’s Cooperation (OC). Then the client requests to terminate the contract because of high OC fees. As his representative, we can only negotiate his request with the vendor, and the vendor can refuse that request.
For sellers: Providing Section 32 to buyers is a legal obligation for sellers. Buyers may be able to withdraw from the sale, ask for compensations or take legal action if sellers provide incorrect or incomplete Section 32. We came across a case recently where the vendor knowingly hid a notice about a window needing repair which resulted in a subsequent deduction in purchase price deducted of $5,000.
How Wealthsource can help
For buyers: We provide Contract of Sale and Section 32 reviews as part of our standard package for buyers. We strongly recommend you send us a copy of Section 32 for review before you sign any documents. By listing key points that you should notice before purchase, we can help you make an informed decision.
For sellers: Our professional conveyancing service includes drafting a Section 32 statement for sellers. We will help you to prepare a complete and accurate Section 32 with all necessary information and certificates. This will include, for example, searches about your property such as zoning, mortgages, covenants, overlays, which need to be included in your Section 32 docuement.
Feel free to contact us via [email protected] or +61 3 9590 6180 for an obligation free quote.