Congratulations. This is a wonderful time for you. You are about to purchase your first home. Enjoy the moment!
What Is The Section 32 Vendor Statement?
As a first time home buyer, you may not be fully aware of all paperwork associated with acquiring your property. There are also some risks that exist, and which may not be obvious upon physical inspection of the property of your choice.
Fortunately, the Government has your interest in mind and has passed (way back in 1962) the Sale of Land Act in Victoria. This act regulates everything related to the transfer of ownership. Under Section 32 of the Sale of Land Act exists a requirement for the full disclosure of all relevant facts about the property by the seller (aka. vendor) to the buyer. This needs to happen with the “Section 32 Statement”. As this is a statement issued by the seller, it is sometimes referred to as the “Vendor Statement”.
You, as the buyer, need to read it carefully, making sure that you understand all. The idea behind this document is for you to be able to make an informed decision. Some support from your lawyer or conveyancer should not be ruled out.
Components Of Section 32 Statement
By reading its name, you may be left with the impression that this is just one document. However, it is not. Rather it is a series of documents that disclose important things about the property for sale. Here is a list of the more important components of the Section 32 Statement (important: this is not an exhaustive list):
Contacts
The Statement will contain the details of the seller.
Title Document
This is the document that shows that the seller is the true owner of the property and has the right to sell it.
Details On Mortgages
Details of all official and/or unofficial mortgages.
Additional Charges
Details of any other charges and/or liabilities pending on the property.
Outgoings
The seller is obliged to provide details of the fees, taxes, charges and all other outgoings for the property.
Zoning Certificate
In order for you as the future owner of the property to be able to use it according to your intentions, you will need the zoning certificate, which stipulates the possible uses of the given land. If you are looking for a residential property, make sure that the zoning certificate of the property under discussion is intended for residential use.
Applicable Planning
All applicable planning and zoning schemes or Government planning proposals, which are known by the seller need to be disclosed to the buyer.
Building Permits
If there is a building on the land, the Section 32 Vendor Statement needs to include all building permits issued in the past 7 years.
Non-Connected Services
The seller needs to disclose any services which have not been connected to the property. Such as water, electricity, gas, sewerage, telephone, etc.
Inspection Report
Should the seller be an owner-builder, who has constructed the building himself (for parts of the building or the whole construction), an inspection report stating all defects, should be included?
Road Access
Details of road access to the property or statement that there is none.
Some of the above components of the Section 32 Statement may not be relevant to your chosen property and hence will not be included in the statement. On the other hand, some additional components of the Statement may be necessary in your particular case. It is advisable to use the support of a conveyancer or lawyer to help us decipher the Statement.
When Are You Entitled To It
You may request Section 32 before making your offer. Actually, the Statement will signal the seller, that there is an interested buyer. Normally the lawyer of the seller should have instructed him to prepare Section 32 well in advance of going to market. This is done so that the potential deal will not be slowed down due to document insufficiencies.
Do You Need The Statement In A Private Deal
You most certainly do. Whoever the seller, you need to know what you are getting into as a buyer. Excuse yourself with the legal requirements and have the vendor draft the Section 32 Statement.
Missing Or Incomplete Section 32 Statement
By law, the seller needs to provide this statement to the buyer prior to the signing of the contract for the sale of the property. Although sanctions for him are severe, you still need to be aware. Have your lawyer check for any inconsistencies or omissions from the Statement. Be extremely aware of the full lack of the Section 32 Statement. Its main use is to protect the buyer and facilitate her informed decision. Hence the lack of the Statement altogether is an alert sign.
Failure to provide Section 32 or providing misleading information could spell criminal charges for the seller.
What Next
When you have reviewed the Statement, and your conveyancer is satisfied with its fullness you may ask the vendor to sign the Statement. This makes it official. Some sellers may also request that you sign the document too, as evidence that the Statement was indeed provided.
Provided that you are satisfied with the Statement disclosures, and with all your other investigations you may now proceed with providing the seller with your purchase offer. Normally this should be done in written form, but your lawyer will walk you through it.
Not All
You now know about a very important document, or rather a set of documents, which will be part of the paperwork around your first home purchase. Although the Section 32 Statement does contain some important disclosures, bear in mind that it is not all-encompassing. For certain information, which is not included in the Statement you will have to find alternative sources of intel. Such important info could be:
- details about the condition of the structure of the building,
- info whether the construction complies with the respective building permits and regulations,
- info on pest problems on the premises, etc.
Be mindful of the existence of Section 32 Statement, but expand your investigation utilising professional services for additional support.