What is a Section 32 Statement?
A ‘section 32’ is a statement required by law to be given by a seller to a buyer. It is also called the ‘vendors statement’ but the terms are interchangeable. The statement is required by Section 32 of the Sale of Land Act 1962 being the Victorian legislation relevant to property sales and hence the name ‘section 32’. The statement must be current and accurate. Importantly Section 32 Statements must contain certain information relating to the property being sold, such as (not an exhaustive list):
- covenants and restrictions;
- outgoings (rates and authorities);
- services connected;
- building approvals where there is a residence on the land;
- domestic building insurance, if applicable.
The Section 32 Statement is typically less than 5 pages long and usually have other supporting documents attached to it.
Giving an unsigned, expired or inaccurate Section 32 Statement can have dire consequences for the seller, possibly giving buyers an opportunity to get out of the contract.
Unsigned Section 32 Statements
If the Section 32 Statement is unsigned and the buyer subsequently signs a contract, this may entitle the buyer to terminate the contract under certain circumstances. There may be defences to this; however the best practice approach is to have Section 32 Statements signed before they are sent to buyers for review. Section 32 Statements can be signed electronically.
Expiration of the Section 32 Statements
Section 32 Statements have no set expiration date. Simply they must:
- contain all the required information;
- not be false or inaccurate;
Practitioners and sellers often rely on certificates and searches in preparing the Section 32 Statement, and these certificates and searches are attached to the statement itself.
The certificates and searches may be regarded as stale after 90 days however this is by no means a definitive rule of thumb. A Section 32 Statement prepared 24 hours early can still expire if any new information comes about before the buyer signs the contract. If indeed there is any missing or inaccurate information, and the new or updating information places the buyer in a substantially worse position, then the buyer can terminate the contract. Even if the seller acted honestly and reasonably, the buyer’s right to rescind and terminate can not be salvaged.
Review by a Property Lawyer
If you are about to enter into a contract or have already entered into one, having a legally trained professional review the contract of sale and vendor’s statement (Section 32 Statement) is crucial. A property lawyer and conveyancer can review the Contract and Section 32 Statement for you.
Where you wish to review the Contract and Section 32 Statement to check if the seller had complied with the law or to check if there are grounds to terminate, a property lawyer may be better suited to reviewing the documentation than compared with a conveyancer. Read about the differences between a property lawyer and conveyancer in Melbourne.