The Section 32 Sale of Land Act is a crucial piece of legislation that applies to the sale of property in Victoria, Australia. For both home buyers and sellers, understanding the requirements of the Section 32 Sale of Land Act is essential to ensure that the transaction proceeds smoothly and legally.
Navigating the complexities of this Act can be a daunting task, especially for those who are new to the property market. That’s why we’ve put together this guide to help home buyers and sellers understand the key provisions of the Section 32 Sale of Land Act and what they need to do to comply with its requirements.
Whether you’re buying your first home or looking to sell your property, this guide will provide you with the information you need to navigate the legal requirements of the Section 32 Sale of Land Act and ensure that your transaction proceeds smoothly and without any legal issues.
Property Legislation By State
While the Section 32 Sale of Land Act specifically applies to the sale of property in Victoria, other states and territories in Australia have similar laws that govern the sale of land. These laws may be known by different names in different states, but they generally serve the same purpose as the Section 32 Sale of Land Act: to provide buyers with information about the property purchase to ensure that all legal requirements are met during the sale process.
For example, in New South Wales, the equivalent legislation is known as the Conveyancing (Sale of Land) Regulation 2022. In Queensland, it is the Property Law Act 1974, while in Western Australia, it is the Transfer of Land Act 1893. In the Australian Capital Territory, the equivalent legislation is the Contracts (Sale of Units) Act 2003.
Although the specific laws and regulations may vary from state to state, the fundamental principles of disclosure and transparency remain the same across the country. If you are buying or selling property in a state or territory other than Victoria, it is important to familiarise yourself with the relevant legislation and seek legal advice if necessary to ensure that you comply with all legal requirements during the sale process.
Who prepares a Section 32?
The seller’s conveyancer or solicitor usually prepares the Vendor’s Statement. A seller may also use a real estate agent to draft the Contract of Sale. These two documents are the most important on the seller’s side of the conveyancing process.
A conveyancer or solicitor prepares Section 32 by getting instructions from the vendor and the necessary certificates from relevant authorities. They also provide competent legal advice.
All information must be accurate and present. Otherwise, the vendor or the legal representative may suffer serious ramifications. The document must include the property’s purchase price, written inspection report, loss of sale, or financial penalties. Otherwise, legal action may ensue depending on the seriousness of the non-disclosure.
That’s why it’s vital to ensure that the legal representation has a strict process when preparing Section 32. Attention to detail and thoroughness will mitigate the risk to vendors and ensure potential buyers are given a legally compliant Section 32 as part of the contract of sale for the property being sold.
(A good real estate agent will have professional connections to conveyancers and conveyancing solicitors, you can compare real estate agents upfront at LocalAgentFinder and get expert advice to help you sell your property.)
Vendor’s Statement & Section 32 Sale of Land Act
If you’re buying or selling property in Australia, it’s important to understand the difference between a Vendor’s Statement and a Section 32 Sale of Land Act. While these terms are sometimes used interchangeably, they are actually two separate documents with distinct purposes.
A Vendor’s Statement is a document that the vendor (seller) is legally required to provide to the buyer before a contract of sale is signed. This document provides important information about the property, such as any mortgages or other encumbrances on the title, any zoning or planning restrictions, and any defects or other issues with the property that the vendor is aware of. The Vendor’s Statement is designed to help the buyer make an informed decision about whether or not to proceed with the purchase.
A Section 32, on the other hand, is a specific section of the Sale of Land Act that sets out the legal requirements for the Vendor’s Statement. The Section 32 Sale of Land Act specifies the information that must be included in the Vendor’s Statement, such as details of any easements or covenants affecting the property, information about any outstanding rates or taxes, and details of any planning or building permits that have been issued.
In essence, the Vendor’s Statement is the document that provides the information, while the Section 32 Sale of Land Act is the legal framework that requires the vendor to provide that information. It’s important for both buyers and sellers to understand the requirements of the Section 32 Sale of Land Act and to ensure that the Vendor’s Statement contains all the required information, as failure to comply with the Act can have serious legal consequences.
The purpose of the statement is to fully disclose all pertinent information to the buyer before the final contract is signed. Hence, a prospective buyer is encouraged to seek legal advice to ensure that the person selling follows the Sale of Land Act.
The vendor must provide a signed Section 32 Statement before the buyer signs their contract, or the buyer will be able to pull out of the contract. While this is the general rule, there are always exceptions, so prospective buyers should consult with their solicitors or conveyancers rather than assuming they can rescind the contract due to this technicality.
How long does a Section 32 last?
The industry rule of thumb is that the section 32 vendor statement stays valid for three months and then should be updated.
The seller’s responsibilities
A seller will also want to use a legal practitioner to prepare the Section 32 statement. Although it’s possible to fill out this form independently, we don’t recommend it as it is a legal document and should be prepared by a legal entity or qualified solicitor.
You may not know all of the legal responsibilities associated with preparing this statement, which could harm you in the future or jeopardise your sale. As mentioned, if false or misleading information is included in the Statement and it is determined that the vendor provided this knowingly or recklessly, you could be found guilty of a crime and fined, as this is a criminal offence.
The vendor, or their property lawyer, must also sign the Section 32 Statement for it to be valid. The buyer will also usually sign this form, but this is not legally required under the direction of the Sale of Land Act.
However, most selling agents will get buyers to sign the statement because it can then be used as proof that the buyer received it before signing the Contract of Sale. This may be useful should the issue arise during the conveyancing process.
Is it possible to change a Section 32 vendor statement?
An estate agent is not allowed to tamper with the Section 32 statement. However, legal advice must be obtained first if changes are to be made.
Every Section 32 statement must be accurate, checked, and finalised before it is presented to the prospective purchaser of the property.
What is included in Section 32?
Some of the information that must be included in the Section 32 statement are the following:
- Register Search Statement copy: This serves as a confirmation of the title details, registered proprietors, notices, any encumbrances, and street address.
- Plan of Subdivision copy: This contains detailed information on lot boundaries and describes any covenants, restrictions or easements that affect the land.
- Services confirmation: This includes information on services, such as water, gas, and electricity, that are connected to the property.
- Planning Statement: This includes specific details on the responsible government authority, planning zone, and overlays that affect the land.
- Certificates: There should be certificates from relevant authorities, such as the local Council, State Revenue Office, VicRoads, etc., detailing levies, notices, permits, outgoings, insurance or proposed plans that may affect the property.
- Building Permits Under the Building Act 1993 (VIC): The building permit should be in the preceding seven years. The building permits will vary based on who did the work. For example, if the owner did the work, an Owner Builder Defects Report that is less than six months old, an Owner Builder Warranty Insurance, and copies of the latest water and council rates bills must be presented.
- Due Diligence checklist: This includes details about the property, such as flood and fire risk, resource activities, soil and groundwater contamination, safety, and more.
Other important documents for Section 32
Zoning Certificate
Zoning restricts land, and a zoning certificate will confirm that the property is fit for residential purposes when selling property.
Owners Corporation Certificate
A body corporate certificate, also known as a strata report, is necessary if the property is an apartment, townhouse or unit. This provides an overview of the communal outgoings for the maintenance of the complex. Additionally, it will include council and water rates.
Any special rules about the property will also be included in the certificate, along with meeting minutes of the Owners Corporation regarding the refurbishment of the complex.
Outgoings
Sellers must provide a ballpark figure of the property’s outgoings, such as taxes, rates or charges.
What happens when there are missing documents?
All the documents required by Section 32 are mandatory; hence, the seller should have all the relevant documents. If there are missing documents, this will give the buyer an option to walk away from the deal.
If the purchaser sticks to the property despite the incomplete documents, they can enquire and ask the seller to provide any missing documents from the Section 32. Hence, it is important to have a professional help you throughout the process to ensure all the necessary documents are there.
Signing Section 32 Vendor’s Statement
Many are curious about how Section 32 is signed with today’s digital advancements. A convenient way to sign documents today is digital signatures that allow a person not to be physically present but still have a document signed and processed immediately.
The question is, are electronic signatures allowed for signing the Section 32 statement?
Digital and electronic signatures are now considered acceptable for signing the Section 32 and the Contract of Sale. However, this should be done properly.
A digital signature uses an encryption device that implies the existence of an authentication network behind the signature. On the other hand, an electronic signature is a stand-alone that acts purely as a representation of the signature of the party. It is made by placing the hand on a key or, in some cases, through voice recognition.
The right time for a Section 32
The Section 32 statement should be provided to the interested party before the contract is signed. That said, as soon as a buyer shows interest in the property, a Section 32 statement should already be provided. That way, the seller can minimise or eliminate delays in the property transaction.
Section 32 statement for a private sale
The law requires a Section 32 vendor statement for any real estate sale. This is why it’s essential to work with a professional. This is because property buyers today usually ask for the Section 32 Vendor Statement to make an informed decision. It’s always best to be prepared and organised to ensure the sale process goes as smoothly as possible.
Do you need to pay for a Section 32 statement?
Sellers will need to pay the conveyancer their service fees for section 32. That said, the cost will vary as some professionals may charge a flat rate to prepare a Section 32, whilst others may charge you an hourly rate.
On the other hand, buyers don’t need to pay for anything to get a copy of Section 32. However, they must pay if they hire a professional to review the statement.
Some conveyancers may provide free contract reviews if you hire them for the conveyancing process when you finally purchase the property. Still, this varies, and discussing the fees upfront is best.
What happens after Section 32 has been reviewed?
Once the buyer’s legal representative has reviewed Section 32, they can decide whether to request any amendments to the contract of sale or make an offer.
Purchasers may also add specific clauses regarding finance approval or building inspections in the Section 32. The conveyancer may make recommendations regarding the building, chattels, goods, and land.
What’s next?
As you can see, the Section 32 Statement is an important part of the conveyancing process. Whether you are a buyer or seller, you want to have your solicitor or conveyancer look closely at this legal document. Remember, any inaccurate information may lead to a criminal offence, hence the need for a proper property disclosure on the residential property being sold. Along with the purchaser’s legal representative, the person selling will also want their real estate agent to be involved in preparing the vendor’s statement, particularly if they are also preparing the Contract of Sale.
You can compare local agents upfront at LocalAgentFinder, who will have professional connections to conveyancers and conveyancing solicitors to help you through the legal process of property purchase or selling your property.