A section 32 statement, also referred to as a vendor’s statement, is a document provided to the buyer by someone selling a property. The statement contains the property title and information about the piece of land being sold. It is aimed at ensuring that buyers buy properties they are really interested in. It is a legal requirement under Section 32 of Victoria’s Sale of Land Act and any buyer who signs a land contract before being furnished with one is at liberty to cancel the contract. 

What Does The Section 32 Statement Contain?

The section 32 statement contains the following information:

• Details of the vendor.

• Any building permit that has been issued on the property in the last 7 years.

• Title details.

• A written inspection report indicating any defects in case the seller is the owner-builder.

• Details of the warranty insurance for the owner-builder.

• Any restrictions that are on the title.

• Planning information and if there are any zoning restrictions on it.

• Any payments on the property such as land taxes being made by the seller.

• Any notices or orders such as fencing, sewerage, and road-widening from the local authorities.

• Any services connected to the property.

• Accessibility to the property by road.

• Declaration if the area in which the property is located is prone to bushfires.

The Section 32 statement does not, however, contain information about the condition of the buildings on the piece of land, compliance with building regulations, and how accurate the measurements on the title are. As a buyer, you will have to take due diligence to find out these on your own. The statement should be factual, accurate and complete as any incomplete or incorrect information can result in legal action against the seller.

Anyone selling a property needs to have a Section 32 statement for the property. The transaction cannot be settled before one is produced by the seller.

How Do You Get A Section 32 Statement?

Although there are DIY conveyancing kits that can enable you to prepare your own Section 32 statement, it is advisable to engage a property lawyer or a conveyancer for the preparation of Section 32 Melbourne. Besides saving you from conducting the various land searches yourself, it also reduces the chances of making any errors and ensures compliance with legal requirements of the Section 32.

Because of the details needed and the searches required, the preparation of Section 32 Melbourne can take up to two weeks. Start planning for the statement early enough so that it is ready by the time you are settling a property transaction. Once it is ready, you will sign it as the seller, or your lawyer might do it on your behalf. The law allows you to use digital or electronic signatures on the document. The buyer will only need to sign it as proof that it was provided to them before the sales contract was signed.

After obtaining it, the Section 32 statement does not have any expiry date. However, you will be advised to update it after a period of 3 months. This is because most of the certifications obtained from the local authorities regarding the property lapse after a period of 90 days. While the Section 32 statement remains valid after this period has passed, the certificates will need further verification during a purchase. You can simply amend the document and replace expired certificates or add new ones.

What Are The Consequences Of Providing A Defective Section 32 Statement To The Buyer?

You already know that the buyer is at liberty to cancel the sales contract if you, as a seller, fail to provide the Section 32 Statement. But what are the consequences for providing the buyer with a defective Section 32 statement to the buyer? What happens if the information contained in the statement is either incomplete or inaccurate? Here are the consequences you stand to suffer if you provide a defective Section 32 statement:

1. Cancellation of the sales contract

The buyer is also at liberty to terminate the property sales contract if you provide them with a defective Section 32 statement. In the event that this happens, you will have to bear any costs the buyer incurs as a result of the cancellation. If you are selling the property through an agent, you will also have to pay the agent their commission in full. You might also incur legal costs resulting from the cancellation.

2. Face criminal charges

If it is determined that you recklessly or deliberately provided the buyer with a defective Section 32 Statement, then you may be culpable for criminal charges, as it is a criminal offence to deliberately give false information.

3. Breach of trade regulations

Providing a defective Section 32 Statement could result in a breach of the Fair Trading Act, and the buyer might decide to sue for misrepresentation under the Act. This could result in penalties for you and your agent (if you are using one for the sale).

4. Legal costs

Besides the costs to the buyer and the agent, and the penalties you are likely to incur, you may have to set aside funds for legal representation if you get sued. This leads to extra costs that you may have not budgeted for and could leave you financially crippled. Criminal lawyers are especially quite expensive to hire.

5. Loss of reputation

There is the risk of losing your reputation as a straightforward seller. You may have difficulties attracting buyers to your property and you may be forced to significantly lower your price in order to sell the property. This can result in financial losses. Real estate agents may also not want to work with you.

To avert such consequences, it is advisable to involve a property lawyer or conveyancer in the preparation of a Section 32 Statement. They are very thorough and guarantee an error-free statement that won’t put you in trouble with the authorities. In the rare event that such errors occur, lawyers and conveyancers usually have professional indemnity insurance and statutory compensation funds that will shield you from incurring financial losses as a result of the error. 

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