Introduction

When purchasing real estate in Victoria, one of the most critical documents you’ll encounter is the Section 32 vendor statement. This legal requirement is designed to provide buyers with essential information about the property that may not be immediately visible. Understanding what a Section 32 entails, how it affects the purchase process, and what you should look for can make a significant difference in your property buying experience. In this blog, we’ll cover everything you need to know about Section 32 in real estate to help you make an informed decision.

What Is a Section 32 in Real Estate?

The Section 32 vendor statement, often simply called a Section 32, is a legally required document that the seller must provide to the buyer before any contract of sale is signed. The document is named after Section 32 of the Sale of Land Act 1962, which outlines the specific disclosures that must be made by the seller. The purpose of this statement is to ensure transparency by providing buyers with all the relevant information about the property.
This information can include details about zoning restrictions, easements, mortgages, planning proposals, and other encumbrances that could affect the property’s use or value. For buyers, a Section 32 is crucial because it helps to reveal any potential issues with the property that may not be apparent during a physical inspection.

Why Is Section 32 Important for Buyers?

Understanding the importance of a Section 32 is key to making an informed purchase decision. The document is a safeguard designed to protect buyers from unexpected surprises after they have committed to buying a property. Here’s why it’s so important:

a. Full Disclosure:

The Section 32 ensures that all legal obligations and potential risks associated with the property are disclosed upfront. This allows buyers to understand exactly what they are buying, including any legal restrictions or financial obligations tied to the property.

b. Legal Protection:

If the seller fails to provide a Section 32 or provides one that is incomplete or inaccurate, the buyer may have the right to withdraw from the sale or take legal action against the seller. This makes it a vital tool for buyers to protect themselves from making a bad investment.

c. Informed Decision-Making:

By reviewing the Section 32, buyers can make a well-informed decision about whether to proceed with the purchase. It provides insights into any issues that could impact the property’s value or the buyer’s ability to use the property as intended.

What Should Buyers Look for in a Section 32?

When reviewing a Section 32 vendor statement, buyers should pay close attention to several key elements. Here’s what to look for:

a. Title Details

Ensure the title details are accurate and that the seller is the legal owner of the property. Look out for any encumbrances, such as mortgages or liens, that could affect your ownership of the property. The title information will also reveal if there are any restrictions, such as covenants, that could limit how you use the property.

b. Zoning Information

Check the zoning details to confirm that the property is suitable for your intended use. For example, if you plan to run a business from the property, you’ll need to ensure that the zoning allows for commercial use. Zoning information can also affect the potential for future development.

c. Easements and Covenants

An easement is a right that someone else has to use part of the property for a specific purpose, such as a pathway or utility access. A covenant is a restriction on how the property can be used, such as prohibiting certain types of construction. Understanding these can help you avoid potential issues after purchasing the property.

d. Outgoings

Review the details of any outgoings, such as council rates, land tax, and water rates. These are ongoing costs that you will be responsible for once you own the property. Knowing these costs upfront allows you to budget accordingly.

e. Building Permits and Warranty Insurance

If the property has undergone any building work in the last seven years, the Section 32 should include details of any building permits and warranty insurance. This is particularly important for ensuring that any work done on the property meets legal standards and is insured against defects.

f. Planning Notices

Sometimes, there may be planning notices or proposals from local authorities that could impact the property in the future. For instance, there could be plans for new infrastructure projects, such as roads or public transport links, that may affect the property’s value or accessibility.

g. Owners Corporation Details

If the property is part of a unit development or apartment complex, it may be governed by an Owners Corporation (formerly known as a body corporate). The Section 32 should include details about the Owners Corporation, including fees, rules, and any ongoing maintenance issues. This is important for understanding your obligations and the costs associated with the property.

The Role of a Conveyancer

Given the complexity of the Section 32 vendor statement, it’s highly advisable to hire a conveyancer to review the document for you. A conveyancer specializes in property law and can help you understand the implications of the information disclosed in the Section 32. They can also identify any potential red flags and advise you on how to proceed.
A conveyancer’s role includes conducting property searches, reviewing the Section 32, and ensuring that the transaction is legally sound. Their expertise is invaluable in protecting your interests as a buyer.