The Section 32 Vendor Statement (Section 32) must be prepared by, or on behalf of, the vendor, and served on any person who wishes to purchase the vendor’s property before the contract of sale is signed. There are serious consequences for the vendor if this procedure is not followed. On this page we begin with general FAQs about the Section 32 Vendor Statement, followed by more specific FAQs tailored to Purchaser and Vendors and how the Section 32 Vendor Statement affects each.
NOTE: For a detailed breakdown of the specific requirements of Section 32 see “Section 32 Explained – A Guide For Consumers or CLICK HERE
The Section 32 is a document provided by the seller of real estate (vendor) to an intending purchaser.
Its name comes from Section 32 of the Sale of Land Act, which requires a vendor to provide certain information to a purchaser BEFORE a contract of sale is signed.
In general terms, if the vendor fails to provide the information required by the Act before the contract is signed, the purchaser will be able to cancel the contract. Of course, there are exceptions to this rule, and purchasers should not assume that any “technicality” will allow them to end the contract.
Before a contract is signed is the best time to get legal advice from a qualified lawyer, as the opportunities to end the contract can be severely limited if legal advice is sought after the sale has been finalised.
In recent years, the information required in a Section 32 has been expanded and extended. Interpretation of the Section 32 requirements, particularly those relating to building works undertaken by an “owner-builder”, can be quite confusing. In addition, failure to comply with some of the rules can attract huge monetary penalties.
See What’s in the Section 32 for information on what is required in a Section 32
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The Section 32 should always be prepared by a qualified lawyer. While this is not stated in the Sale of Land Act, the fact that it is a legal document means that a vendor must be given competent legal advice by a qualified lawyer in order to understand the responsibilities associated with the preparation of the Section 32.
For example, a vendor who knowingly or recklessly provides false information, or fails to provide ALL of the information required by Section 32 commits a CRIMINAL OFFENCE, and can be fined.
A vendor who commits a criminal offence because they were not properly advised by a real estate agent or conveyancer (both of whom routinely prepare the Section 32 for uninformed consumers) will be told by the estate agent or conveyancer “I am not allowed to give you legal advice, because only a qualified lawyer can give legal advice or perform legal work”.
Usually, the Section 32 is prepared by the vendor’s lawyer, and delivered to the real estate agent. The agent then makes the Section 32 available to purchasers.
Where the vendor is selling without the involvement of an agent, the vendor’s lawyer will usually provide the Section 32 direct to the purchaser, or send it to the purchaser’s lawyer. These days it is most common for the Section 32 to be combined with a blank contract, and provided electronically.
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These days it is possible for us to complete a Section 32 Vendor Statement within 24 hours, or even on the same day as we receive client instructions. Of course, this depends on the ability of the local council and other authorities to processes and electronically deliver their search certificates. However, because of the searches involved in obtaining information about some properties, particularly where there is an owners corporation involved, a Section 32 can take a weeks or more to complete.
If the vendor is an owner-builder there may be a legal obligation for the inclusion of an Owner-builder Defects Report in the Section 32, and possibly Home Owner Warranty Insurance.
In some regional areas it can also take longer if there are grazing or water drawing licences involved, as these must also be disclosed in the Section 32.
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The vendor is the only person who is required to sign the Section 32. The vendor may sign personally, or through their legal representative.
Most real estate agents will tell purchasers that they too must sign the Section 32.
This is not necessary. It is only to protect the estate agent. By having the purchaser sign the Section 32 the agent is able to prove that a copy of the Section 32 was delivered to the purchaser BEFORE the contract was signed. This is the one and only reason why purchasers are asked to sign the Section 32. But be careful, as we have seen numerous instances where the Section 32 was delivered after the contract was signed with both the contract and the Section 32 being back-dated by the real estate agent to make it appear that the Section 32 had been delivered before.
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The simple answer is yes. Electronic and digital signatures have been found to be acceptable for the signing of both the Section 32 Vendor Statement and the Contract of Sale, so long as it is done correctly.
A distinction needs to be made between a digital signature and an electronic signature. A digital signature involves an encryption device and implies the existence of an authentication network standing behind the signature. This is the process used in electronic conveyancing for execution of the transfer and involves a trusted third party signing the transfer of land on behalf of the parties. This no doubt satisfies the requirements of the Statute of Frauds.
An electronic signature, on the other hand, stands alone and acts purely as a representation of the signature of the party. It is not made by hand, as is the case of a traditional signature, but rather is formed by the placing of the hand on a key, or even conceivably by voice recognition software generating the appropriate keystrokes.
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The Section 32 must be provided to a purchaser BEFORE the contract is signed.
Sometimes an agent will have the purchaser sign a contract first, and include a special condition in the contract stating that the sale is subject to the vendor providing the purchaser with a copy of the Section 32. In such circumstances the sale is fatally flawed, and the purchaser is entitled to cancel it.
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The following is a list of the basic information found in a Section 32. Further information may be required -it depends on the property being sold. (Remember, legal advice from a qualified lawyer should always be sought regarding the information contained in the Section 32, and what information SHOULD be included).
Remember, it may appear safe to receive a Section 32 that discloses no adverse information about the property – but the question remains: what SHOULD be there, but is NOT there?
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Vendors often ask, “How long does a Section 32 Vendor Statement last?” The industry rule of thumb is that a Section 32 remains valid for 3 months, and then it should be updated. However, the situation is not really that simple.
The Section 32 will usually contain a set of certificates (also known as Section 32 “searches”) obtained from various authorities, including the local council, water authority, State Revenue Office, VicRoads etc. These certificates confirm or “certify” as correct the information they contain, giving a person who relies on this information certain rights if the information is incorrect. These certifications usually have a stated time limit of 90 days, which is where the 3 month “lifespan” of the Section 32 comes from.
So, while there is no expiry date per se, the information in the Section 32 may be regarded as stale after 90 days. Of course, this does not mean that the Section 32 is invalid, but it does mean that information contained in the certificates should be not relied upon without further verification. A vendor is always advised to check the Section 32 statement just before entering into a contract of sale, to ensure that the information it contains remains complete and correct as at the day of sale. If there is any uncertainty about the information being complete or accurate then the Section 32 should be updated, either by amending or by adding or replacing certificates.
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As discussed above, it is a criminal offence for a vendor to deliberately or recklessly provide false information, or to fail to provide all of the required information. A person found guilty of this is liable to a penalty of 50 penalty units.
Where a vendor has failed to comply with the provisions of Section 32, a purchaser may be entitled to end the contract at any time, up until the day of final settlement. This can result in huge costs to a vendor. The vendor may still have to pay a full commission to the estate agent, then a second commission if the property is to be sold again, plus legal costs, plus the cost of the purchaser’s loss.
Of course, there are exceptions. A mere technical breach may not necessarily result in cancellation of the contract. Legal advice should be sought before assuming anything with regard to breaches and remedies relating to Section 32 of the Sale of Land Act.
It is also possible that a dissatisfied purchaser of real estate may be able to take action for misrepresentation or for breaches of the Trade Practices Act or the Fair Trading Act.
There may also be other specific remedies available where the agent has engaged in improper conduct in order to bring about the sale.
Of course, the details of each case must be considered to determine if there has been a breach, who is responsible for the breach, and what remedies may be available. Legal advice from a qualified lawyer is advised before any assumptions are made about a purchaser’s ability to end a contract on the basis of a breach of Section 32.
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The problem with a Section 32 Vendor’s Statement can be not so much what it does contain, but what it SHOULD contain.
When reading a Section 32, the purchaser should approach from 3 levels:
The following information is of a general nature, and alerts consumers to the most basic of matters to be checked.
As a law firm, we must advise that it is dangerous for a purchaser to check a Section 32 Vendors Statement themselves.
It is best for a purchaser to have a qualified lawyer check the Section 32, and draft the contract of sale on the purchaser’s behalf. We invite all purchasers to use our
pre-purchase contract checking and advice service!
The vendor’s name/s will be included in the Section 32. But it is often the case that the person selling the property is not actually the owner of the property.
It is important to check that the person selling the property is entitled to do so. The first document to check is the Certificate of Title. If the names appearing on the Certificate of Title are different to the vendors, then further checks are made to verify the vendor’s right to sell. There may a Power of Attorney, or a Grant of Probate included in the Section 32. If not, then further investigations will be required.
Remember, many Section 32s are prepared by unqualified conveyancers who are not aware of the investigations needed to ensure that the vendor is entitled to sell, or the legal documents required to give the vendor authority to sell.
The Section 32 will also identify WHAT is being offered for sale.
You may have been shown a block of land by the agent, but is it the same block of land described in the Section 32? What if the agent has given you the wrong Section 32?
The Certificate of Title contained in the Section 32 will include a detailed description of the property for sale. In most cases the Section 32 will reference a Lot, and the Plan of Subdivision on which the Lot appears.
It is important to confirm that the land “on the ground” corresponds with the Lot described in the Section 32. This means checking that the dimensions of the Lot, as described in the Plan of Subdivision, are the same “on the ground” and that the fences are standing on their correct boundaries.
Where the property for sale is a unit, care should be taken to identify any carparks associated with the unit. It is often discovered that a carpark has its own Certificate of Title, and this has been overlooked when the Section 32 was prepared!
These are just some of the “quality” issues confronting a purchaser. Most of these can be answered in the Section 32. As long as the Section 32 is true and complete, there will, at least, be some indication of where further enquiries can be made.
Again, legal advice and assistance from a qualified lawyer can alert a purchaser to what SHOULD be in the Section 32, and what further enquiries should be considered. Please click on the link below for further information.
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