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Property: Vendor's statement overhaul

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Cite as: July 2014 88 (07) LIJ, p.76

Changes to section 32 include a due diligence checklist to be made available to prospective purchasers.

During 2012 the Department of Justice undertook a review of vendor disclosure obligations with a view to reducing red tape. The Sale of Land Amendment Bill 2014 amends s32 and will come into effect on 1 October 2014.

The most significant change is the total re-structure of the section. Section 32 has been amended many times since its introduction in 1982 and this review has totally recast the format of the section with a view to making it more logical in its layout by collecting together sub-sections that relate to topics such as financial matters, insurance, permits and title. This change will challenge practitioners to re-learn the section and may improve comprehension of the section. The other significant change is the introduction of the concept of a due diligence checklist to be made available to prospective purchasers.

s32 – This foundation section creates the obligation on a vendor to “give” to a purchaser a vendor’s statement before the purchaser signs the contract. The section does not require a separate copy of the statement to be included in the contract, theoretically halving the number of copies required. In fact, the existing obligation to have a separate vendor’s statement together with a separate copy in the contract was generally honoured in the breach, with common practice being to simply include the vendor’s statement in the contract. It is anticipated that this practice will continue and vendors will provide the vendor’s statement as an attachment to the contract, although technically this will not be necessary.

Subsequent sub-sections require disclosure of:

s32A – any mortgage that is not to be discharged, any existing charge, details of outgoings and additional terms contract information;

s32B – building insurance (if risk passes to the purchaser) and owner-builder insurance;

s32C – easements etc and planning information, including bushfire prone areas and road access. In relation to planning, a new requirement to disclose “the name of any planning overlay” has been included;

s32D – notices “made” in respect of the land. This is largely as before, but slightly changed to introduce the qualifying phrase “directly and currently” affecting the land. This may be perceived as limiting the type of notice that may be encompassed by the sub-section;

s32E – building permits issued within the last seven years, if the property includes a residence. At present, this does not require disclosure of permits that have not been issued, whether a permit was required or not;

s32F – owners corporation particulars. This is perhaps the most significant change. The owners corporation information can still be provided by a certificate obtained from the owners corporation, but it may also be provided by the owner directly. Importantly, if the owners corporation is inactive, no information is necessary. An owners corporation is inactive if it has not met, fixed fees or held insurance in the last 15 months;

s32G – growth area infrastructure contribution (GAIC) information;

s32H – services. The vendor must now disclose services that are not connected rather than the existing requirement to disclose services that are connected. If services are connected at the day of sale, the vendor has no disclosure obligation;

s32I – title. A copy of a Register Search Statement and diagram (plan of subdivision) must be provided, together with proof of right to sell (if applicable). Any proposed plan of subdivision must also be included;

s32J –proof. Disclosure may be achieved by attaching relevant documents but other than title documents, no documents are required and disclosure may be made by simply providing the information.

s32K – is the avoidance provision and allows a purchaser to rescind the contract if the vendor provides false or inadequate information. At present, the right is subject to the purchaser proving that the vendor acted unreasonably and that the purchaser has suffered detriment.

s33 – Due diligence checklist. This is designed to alert a prospective purchaser to various consumer protection issues. A vendor (or agent representing the vendor) of residential property must ensure that the purchaser has access to the checklist, however failure to do so will not entitle the purchaser to rescind the contract. The checklist will be published on the website of Consumer Affairs Victoria.

RUSSELL COCKS is author of 1001 Conveyancing Answers. For more information go to The LIV is preparing an updated section 32 Vendor’s Statement which will be available in July 2014.


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