Introduction

If you’re considering buying or selling property in Victoria, one term you’ll likely come across is Section 32. This document, also known as the Section 32 vendor statement, is a legally required disclosure that provides prospective buyers with essential information about the property. But what exactly is included in a Section 32, and why is it so important? In this blog, we’ll break down the key elements of a Section 32 to help you understand what to look for and why each component matters in a real estate transaction.

What Is a Section 32?

A Section 32 vendor statement is a legal document that the seller must provide to the buyer before a contract of sale is signed. The name comes from Section 32 of the Sale of Land Act 1962, which mandates this disclosure. The purpose of the Section 32 is to ensure that the buyer has all the necessary information about the property to make an informed decision. This document includes a variety of details that aren’t always immediately obvious during a property inspection, such as legal obligations, restrictions, and potential liabilities.
Failing to include any required information in a Section 32 can lead to serious legal consequences, including the buyer having the right to withdraw from the sale. Therefore, it’s crucial for sellers to ensure that the Section 32 is accurate and complete.

Key Elements Included in a Section 32

A comprehensive Section 32 vendor statement typically contains the following key elements:

a. Vendor’s Details

This section of Section 32 includes the seller’s full name, address, and contact information. This is crucial because it identifies the legal owner of the property and confirms that they have the authority to sell the property.

b. Title Information

The title information is one of the most critical components of a Section 32. It includes a copy of the certificate of title, which serves as proof that the seller owns the property and has the legal right to sell it. The title information will also reveal any encumbrances, such as mortgages, charges, or liens, that are registered against the property. This section ensures that the buyer is aware of any financial obligations tied to the property.

c. Zoning Information

Zoning information is another essential element included in Section 32. It details how the property can legally be used, whether for residential, commercial, or industrial purposes. This information is crucial for buyers who may have specific plans for the property, such as building a new structure or changing its use. Knowing the zoning regulations upfront can prevent future disputes and ensure that the property is suitable for the buyer’s intended use.

d. Easements and Covenants

Easements and covenants are legal restrictions that can affect how a property is used. An easement gives someone else (such as a utility company) the right to use part of your land for a specific purpose, like running power lines or water pipes. A covenant is a restriction on how the property can be used, such as prohibiting the construction of certain types of buildings or requiring the property to be used in a specific way. The Section 32 must disclose any easements or covenants that apply to the property, so the buyer knows exactly what they’re getting into.

e. Outgoings

The outgoings section of a Section 32 details any ongoing costs associated with the property, such as council rates, water rates, and land tax. This information helps the buyer understand what financial obligations they will be taking on if they purchase the property. Knowing the outgoings in advance allows buyers to budget appropriately and avoid any surprises after the sale.

f. Building Permits and Warranty Insurance

If any building work has been carried out on the property within the last seven years, the Section 32 must include details of any building permits that were issued and any warranty insurance that covers the work. This is particularly important if the property was built or renovated by an owner-builder, as the buyer needs to know that the work was done to a high standard and is covered by insurance in case any defects are discovered after the sale.

g. Planning Notices

Sometimes, there may be planning notices or proposals from government authorities that could affect the property in the future. For example, a proposal to build a new road nearby or a plan to rezone the area. These notices must be disclosed in the Section 32 so that the buyer is aware of any potential changes that could impact the property’s value or use.

h. Owners Corporation Information

If the property is part of an apartment complex or a unit development, it may be managed by an Owners Corporation (formerly known as a body corporate). The Section 32 should include details about the Owners Corporation, such as fees, rules, and any ongoing maintenance issues. This information is vital for buyers to understand their rights and responsibilities as part of the community.

Why Are These Elements Important?

Each of these elements plays a critical role in providing transparency during a property transaction. For buyers, understanding these components helps ensure that they are fully aware of what they’re purchasing and any potential risks involved. For sellers, providing a complete and accurate Section 32 helps protect against legal disputes and ensures that the sale proceeds smoothly.