The Section 32 - Your Top Five Questions Answered
What is the Section 32?
The Section 32 is a mandatory document that discloses information that may affect the value of the land being sold in a property transaction. Also known as a Vendor’s Statement, the term ‘Section 32’ is derived from the correlating section under the Sale of Land Act 1962 (VIC).
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 Section 32 is typically provided to prospective purchasers during the campaign for the sale of the property. This allows the prospective purchasers to complete their due diligence and make an informed decision regarding their potential purchase of the land being sold.
What should I include in the Section 32?
The information required to be provided in, or attached, to the Section 32 statement is stipulated in subsections 32A–32I of the Sale of Land Act. Pursuant to those subsections, the information that must be conveyed in the Section 32 and provided to prospective purchasers may include, but is not limited to, the following:
a copy of the Register Search Statement to confirm the title details, the registered proprietor(s), any encumbrances, caveats, notices, and the street address of the land being sold;
a copy of the Plan of Subdivision detailing the boundaries of the lot and a description of any easements, covenants, or restrictions affecting the land;
confirmation of the services (water, sewerage, gas, electricity, telephone) that are connected to the land;
a planning statement specifying the name of the responsible government authority, the planning zone and any overlays affecting the land, and the name of the planning scheme;
certificates from the relevant authorities including, but not limited to, the local Council, the local Water Authority, VicRoads, State Revenue Office, and the Owner’s Corporation (if applicable). These certificates may outline any outgoings, levies, notices, permits, insurance or proposed plans that may affect the land;
any building permits issued under the Building Act 1993 (VIC) in the preceding 7 years. If required, an occupancy permit, final inspection, defects report, or insurance may be included; and
a Due Diligence checklist.
Who prepares the Section 32?
A vendor will engage a legal representative, being a conveyancer or solicitor, to prepare the Section 32. The vendor’s legal representative will prepare the Section 32 by obtaining instructions from the vendor and collecting the appropriate certificates from the relevant authorities.
Should the vendor or the vendor’s legal representative fail to disclose any information that ought to have been included in the Section 32, or provide misleading or deceptive information, the Section 32 may be deemed ‘defective’, for which the vendor may suffer serious ramifications. Potential consequences for the vendor preparing a defective Section 32 may include the purchase price of the property being reduced, the loss of sale of the property entirely, financial penalties and/or further legal action depending on the severity of the non-disclosure.
Merton Lawyers’ Private Clients team undertakes a strict process when preparing the Section 32 to ensure that all the essential information and documentation that is required to be disclosed is captured from the vendor. Our thoroughness and attention to detail mitigates the risk to vendors and ensures that prospective purchasers are provided with a legally compliant Section 32 as part of the contract of sale for the land being sold.
What are the ramifications of either failing to provide, or providing a non-compliant Section 32 to the purchaser?
If you failed to provide the purchaser with the Section 32 prior to signing the contract, the purchaser may be entitled to either rescind or terminate the contract at any time and seek compensatory relief from you.
Further, even where you have provided the purchaser with the Section 32 prior to them signing the contract, if misleading or deceptive information is found to have been included in the Section 32, the purchaser may also be entitled to rescind or terminate the contract and seek further compensatory relief from you for any loss and damage that they may have suffered.
As a prospective purchaser, what do I look for in the Section 32?
Upon examining the Section 32, your conveyancer or solicitor will offer legal advice concerning matters that may affect the value of the property or require further investigation. Our examples of matters listed under “What should I include in a Section 32?” are by no means exhaustive.
As part of your due diligence, it is essential that an experienced professional review the Section 32 prior to the signing of a contract to identify and conduct further enquiries into any hidden issues that may adversely affect the value of the property.
It is also recommended that you inspect the land being sold prior to review of the Section 32 to assist your conveyancer or solicitor with any queries they may have in respect of the layout or condition of the land.
Where to next?
For more information regarding the preparation or review of a Section 32, please contact us at: hello@mertonlawyers.com.au
We would love to help you make an informed decision about your property transaction.
“Please note that these Conveyancing Publications are intended to provide commentary and general information only. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from these Conveyancing Publications. We further note that the information provided may differ as amongst the different States and Territories outside of Victoria.”
