A Section 32 statement is also known as the Vendor’s Statement. We briefly touched on the Section 32 when we discussed buyers and sellers. In this article, we’ll take a closer look at the Section 32 based on the many questions we receive about it.
What is a Section 32?
Named from Section 32 of the Sale of Land Act 1962, the Section 32 statement is a legal declaration with information on any crucial details of the property, which a seller must provide to interested buyers. Some examples are:
The Section 32 statement contains information about the property’s title, including:
- mortgages
- covenants
- easements
- zoning
- outgoings (for example, rates)
- declaration if located in a bushfire-prone area
The Section 32 statement is separate document attached to the Contract of Sale. Real estate agents make the documents available to prospective buyers before the sale or auction. Additionally, a prospective buyer may have the statement checked by his or her own legal practitioner or conveyancer before purchase.
Why is a Section 32 important to buyers and sellers?
Buyers
Some aspects of a property are not immediately obvious inspecting a property. The Section 32 document ensures that sellers must disclose certain matters as required. This information may be crucial for buyers when they’re making a decision about the property.
A common example whether there are any covenants on the title, which set out restrictions for the property. These covenants on title may impact how much you can do to the property if you want to renovate.
Sellers
Sellers must provide the Section 32 statement under legal requirements. A completed Section 32 statement must include necessary certificates and documents, such as register search statement, and property reports. If a Section 32 is found to have incorrect or insufficient information, a buyer may be able to withdraw from the sale or take legal action.
A Section 32, along with the Contract of Sale will be prepared by your legal professional or conveyancer and provided to potential buyers before the sale or auction.
What are the risks of getting it wrong?
Buyers
As a purchaser of the property, it is up to you thoroughly check the accuracy of the Section 32 and all other related documents that have been made available. You will have very limited negotiating power once a contract has been signed.
For example: a buyer has signed a Section 32 for a property managed by an Owners Cooperation (OC). The buyer later requests to terminate the contract because of high OC fees. At this stage, a legal professional or conveyancer can only negotiate his request with the vendor. The vendor can refuse that request.
Sellers
Providing Section 32 to buyers is a legal obligation for sellers. Buyers may be able to withdraw from the sale, ask for compensations, or take legal action if sellers provide an incorrect or incomplete Section 32. There have been cases where vendors have knowingly hidden information, such as notices about a window needing repaired, which resulted in a subsequent deduction in purchase price.
How W Legal Group can help
Whether you’re selling your property or interested in purchasing one, W Legal group can assist you with drafting an accurate and comprehensive Section 32 statement, or thoroughly review the Section 32 statement and Contract of Sale for your potential future property.
Feel free to contact us via hello@wlegalgroup.com.au or call us for an obligation free quote.
