Section 32 vendor’s statement

 Section 32 Vendor’s statement

Section 32 of the Sale of Land Act requires the vendor to disclose certain matters to the purchaser before the purchaser enters into the contract. This statement must be signed by the vendor, or an agent of the vendor. This statement must be provided to the purchaser before the signing the contract of sale. Whilst the Section 32 Vendor’s statement is a standalone separate document, it is usual practice to include it as part of the contract of sale.

The section 32 Vendor’s statement must be accurate and reflect the true position of the vendor’s title and interest in the property. It must give the purchaser all the information required as at the time of signing of the contract.

Here you can find a proforma template of the Section 32 Vendor’s statement.

 Basic requirements for the Section 32 Vendor’s statement

Section 32A (financial matters  to be disclosed)

Mortgage– this section relates to a mortgage that is not to be discharged. This is a very rare occurrence

Charge– this relates to charges arising out of statute, such as a land tax charge

Outgoings- details of outgoings must be included in the Section 32 vendor’s statement. Outgoings include rates, taxes or charges or other similar outgoings affecting the land.

Terms contract- the parties may enter into a terms contract that involves multiple payments. If this is the case the vendor is required to provide an additional statement, as set out in Schedule 2 of the Sale of Land Act, outlining the costs of the vendor finance.

Section 32B (insurance details to be disclosed)

The vendor must disclose particulars of the vendor’s insurance if the contract does not provide for the property to remain at the risk of the vendor. General condition 2 of the 2008 standard contract provides for the property to remain at the risk of the vendor. So if the standard pro forma contract is used the particulars of insurance will not be required.

Particulars of any owner builder insurance will also need to be disclosed if within the preceding 6 years a dwelling was constructed onto the land. This is not a catch all insurance disclosure obligation. It only applies to owner- builder insurance policies, even if the current vendor was not the owner-builder. There are no obligations to disclose insurance obtained by registered builders.

Section 32C (matters relating to land use to be disclosed)

A description of an easement, covenant or other similar restriction (whether registered or unregistered) must be disclosed.

Easements-  registered easements are to be disclosed by annexure of a copy of the title and unregistered easements must be specifically identified. If the description of the easement on the title is insufficient to adequately describe the easement, a copy of the easement document must be provided. Water, sewerage or drainage pipes may constitute unregistered easements.

Covenants- registered covenants may be disclosed by annexure of a copy of the title, but sufficient particulars of the covenant must be given. If the title merely describes the covenant by reference to a identifier, it will be necessary to include either a copy or description of the covenant in the statement.

Other similar restriction – previously a lease was not recognised as an ” other similar restriction”. In the case of Vouzas v Bleake House Pty Ltd [2013] VSC 534 it was presumed that a lease did constitute an “other similar restriction”. However, a proposed transfer of that lease did not require disclosure. A continuing breach of the lease by a tenant may be something that the landlord may be obliged to disclose pursuant to trade practice principles.

Breaches- a current breach of an easement, covenant or other similar restriction affecting the land must also be disclosed. A property subject to such a breach at the time of sale may be sold, if the breach are disclosed to the purchaser at the time of sale.

Bushfire prone land- a disclosure as to whether the land is in a bushfire prone area.

Road access- a disclosure as to whether there is no road access to the property

Planning- a disclosure of the basic details of the relevant planning scheme, the responsible authority, the zoning or reservation of the property and the existence of an planning overlay. Upon provision of the basic information, it is up to the purchaser to be satisfied as to the consequences of the planning scheme affecting the property

Section 32D (notices to be disclosed)

This section requires the disclosure of particulars of any:

–> notice, order, declaration, report or recommendation of a public authority or government department affecting the land; or

–> approved proposal affecting the land;

that directly and currently affects the land and of which the vendor might reasonably be expected to have knowledge. A building permit requiring works to be performed on the property is an approved proposal affecting the land.

Section 32E (building permits issued)

Particulars of building permits issued with the last 7 years must be disclosed. This section does not require particulars of permits that should have been obtained or of work that has been carried out without a building permit.

Section 32F (owners corporation certificate)

An owners corporation certificate issued pursuant to s151 Owners Corporation Act is to be attached to the section 32 vendor’s statement, together with copies of documents required to be attached to the owners corporation certificate pursuant to s 151(4)(b).

The documents are:

–> rules of the owners corporation;

–> prescribed statement providing information to prospective purchasers;

–> all resolutions made at the last annual general meeting; and

–> a statement that further information can be obtained by inspecting the owners corporation register.

An owners corporation certificate is not required if the owners corporation is inactive. An owners corporation is inactive if it has not held a meeting, struck levies or held insurance in the preceding 15 months. If there is common property on the plan, then s11 Sale of Land Act requires the vendor who is selling the property affected by an owners corporation to ensure that all required insurance is in place. Section 60 of the Owners Corporation Act requires the owners corporation to take out public liability insurance in respect of common property and so that effect of s11 is to require the vendor to ensure that the owners corporation has common property insurance and in doing so the owners corporation is no longer “inactive”. The “inactive” exception may be applicable if the property being sold is on a 2-lot plan, as these are exempt from the insurance obligation under s7 of the Owners Corporation Act. Failure to include an owners corporation certificate may entitle the purchaser to avoid the contract Nicolacopoulos v Khoury [2010] VCC 1576.

Section 32G (growth areas infrastructure contribution details)

If the property is affected by a GAIC (growth areas infrastructure contribution) then the relevant information must be provided in the section 32 vendor’s statement. The title search will reveal whether there is a GAIC.

Section 32H (disclosure of non-connected services)

An obligation to list services that are not connected. There is no obligation to advise whether services are available. Specified services are electricity, gas, water, sewerage and telephone. Services are not connected unless they are actually operating on the property. It is not sufficient for the electricity to come to the meter box but the service is not operational within the property. Not connected would therefore be the appropriate description of services that are not operational.

Section 32I (evidence of title)

Title- a copy of the most recent title search

Proof of right to sell- if the vendor is not the registered proprietor, evidence of the vendor’s right to sell is required. This may arise when the vendor is selling the property before settling the purchase of the same property, if the vendor is an executor of an estate or the vendor is a mortgagee. Evidence may be in the form of a copy of the purchase contract, copy of proposed transfer, copy of will or copy of notice to pay.

Plan of subdivision- if the land has ever been subdivided, a copy of the plan of subdivision is required. if the land is described as a lot on a plan, a copy of the plan must be provided. If the land is a lot on a proposed plan of subdivision, a copy of the proposed plan is required. If the land is in the second or subsequent stage of a plan of subdivision then the following are required: the plan for the first stage, details of any requirements in a statement of compliance for the stage in which the land is included that have not been complied with, details of any proposal relating to subsequent stages and details of planning permits authorising staged subdivisions.

Section 32J (information required to be provided by way of certificate, notice, policy of insurance or other document)

The information that is required may be provided by attaching a certificate, notice policy of insurance or any other documents to the section 32 vendors statement.

Section 32K (supply of false information, failure to supply information or failure to supply section 32 vendor’s statement)

The purchaser may terminate the contract if the vendor fails to comply with the disclosure obligations. This right is subject to:

–> the vendor having acted honestly and reasonably; and

–> the purchaser is not “substantially in as a good a position”

Honest and reasonable– it has been suggested that a vendor who acts negligently cannot be said to have acted honestly and reasonably. However, a number of cases have excused vendors despite their negligent behaviour. A vendor will not be vicariously liable for the negligence of their agent or solicitor in preparation of the section 32 vendor’s statement. In determining whether the vendor has acted honestly and reasonably only the conduct of the vendor is relevant.

Substantially in as good a position-  a breach of section 32 vendor’s statement will be excused unless the purchaser can establish that the breach has caused them some detriment. This can be established if the purchaser can show that the purchaser would not have purchased the property if the disclosure had been made. Action taken by the vendor during the course of the contract to overcome the non disclosure may mean that the purchaser is in as good a position. Failure to provide a section 32 vendor’s statement does not make the contract illegal or void, it simply provides the purchaser with a possible right to terminate the contract. The purchaser’s actual knowledge of the true situation is a relevant consideration in determining the consequences of the vendor’s conduct

Section 32L (offence to provide false information, incomplete information or fail to provide section 32 vendor’s statement)

It is an offence to provide false information, incomplete information or to fail to provide the section 32 vendor’s statement at all.

Section 32M (notice of acquisition)

Where a notice to acquire land has been served under the Land Acquisition and Compensation Act and the land is subject to a contract of sale, the purchaser may rescind the contract.

Section 32N (contracting out)

An attempt by the vendor to contract our of the disclosure obligations is void.

Section 32O (earlier contract)

If disclosure was previously made in a prior contract, disclosure need not be repeated if the parties subsequently enter into a new contract of sale.

Section 33 (due diligence checklist)

The estate agent or the vendor must ensure that the purchase has received a copy of the Due Diligence Checklist. Failure to provide this is an offence but it does not entitle the purchase to avoid the contract

Section 52 (transitory)

If the section 32 vendor’s statement was signed prior to 1 October 2014 and was valid when signed, then it remains valid.

Contact us today if you would like us to draft the section 32 vendor’s statement.