Buying a property can be an emotional roller coaster. But amid the excitement, there are several important legal requirements to consider.
One of them is the Section 32. A compulsory part of the purchase process in Victoria, this is a legal document intended to provide a purchaser with relevant information that could influence their decision to proceed with a transaction. The seller of a property must provide the Section 32 to a potential buyer before the purchaser signs the contract of sale.
If that sounds daunting, don’t despair. You can consider the Section 32 document a roadworthy certificate for the property. It’s designed to protect buyers from incorrect information and to shield them from any problems that may arise with the property once sold.
That said, it’s highly recommended that you seek independent legal advice to help you understand the ramifications of the Section 32 and the entire contracting process.
Most people buy or sell property only a few times in their lives, so they are unlikely to be conversant with the laws surrounding it. A lawyer’s professional expertise will give you peace of mind.
You might see a Section 32 referred to as a Vendor’s Statement. The actual term “Section 32” is derived from the correlating section under Victoria’s Sale of Land Act 1962:
“Section 32(1) of the Sale of Land Act provides that a vendor under a contract for the sale of land must give to the purchaser, before the purchaser signs the contract, a statement signed by the vendor that contains the matters and attaches the documents specified in Division 2 of Part II of the Sale of Land Act.”
The legislation requires a seller to provide specific information to a buyer about the property in question before they sign the contract of sale. Typically provided to prospective purchasers by the real estate agents during the sales campaign, the Section 32 document allows the potential buyers to complete their due diligence and make a properly informed decision regarding their purchase.
It is important to note that, while the two documents are often confused, a Section 32 vendor statement is not a contract of sale. The signing of a contract of sale is legally contingent on the provision of a Section 32.
Unfortunately, many home buyers, particularly first-time buyers, are unaware of the Section 32 and sign the contract of sale without reviewing the vendor’s statement carefully.
This can put them at risk as the Section 32 can reveal any potential problems with the property being sold that might not be readily obvious when it is physically inspected.
These include things such as building works having been undertaken without a permit, zoning for the property (commercial zoning, for example, could mean you wind up with a noisy workshop or petrol station next door), and the existence of any easements that have the potential to affect future renovations.
Any heritage controls over the property should also be stated in the Section 32 – these can be hugely important for anyone planning major renovations or demolishing an existing building to make way for a new build.
In essence, the Section 32 can reveal deal-breakers and save new buyers from any unpleasant surprises down the track, so it’s important to include it on your buyer’s essential checklist.
The vendor must ensure the Section 32 is all in order and up to date. If the Section 32 vendor statement contains incorrect information, the buyer may be able to withdraw from the sale and, in some cases, even take legal action.
The legislation doesn’t specify it, but a qualified legal representative should prepare the Section 32, given its importance to a real estate transaction. Typically, a vendor will engage a conveyancer or solicitor to prepare the document; this person will obtain instructions from the vendor and collect the appropriate certificates from the relevant authorities.
While it is not explicitly stated in the Sale of Land Act legislation, the fact that it is a legal document requires a vendor to have received competent legal advice from a qualified lawyer or conveyancer in order to fully understand the responsibilities associated with the preparation of a Section 32.
There are serious consequences for a vendor if they don’t disclose all the necessary information required by the Section 32 statement. If a vendor knowingly or recklessly gives false information when the Section 32 document is being prepared, it constitutes a criminal offence and they can be fined.
A Section 32 will include general details about the property, along with specific information. While not confined to these points, it is necessary to include:
After reviewing the Section 32, a lawyer or conveyancer will be able to offer advice regarding any matters that have the potential to affect the value of the property or require further investigation before the buyer signs the Section 32.
If the property is governed by an owners’ corporation (formerly known as a body corporate), the owners’ corporation certificate and accompanying documents must be included in the Section 32 statement. It’s important to check these thoroughly to see what stipulations are put upon the use and enjoyment of the property. Owners’ corporation rules can stipulate, for example, that pets are not allowed in the building.
Section 32 statements are sometimes prepared well in advance of the sale of the property, so prospective buyers should either request a new certificate before settlement or organise a time to view the owners’ corporation register.
You can obtain a Section 32, along with the contract of sale, directly from the real estate agent handling the sale of the property. They will generally have these documents on hand at each open for inspection.
Due diligence also requires the buyer to have inspected the property being sold before reviewing the Section 32, so make sure you attend at least one open house (and ideally more) before you sign on the dotted line.