What is a Section 32 Statement?
One of the most overlooked but underestimated parts of the purchasing/selling process in real estate is the Section 32 Statement, also known as Vendor Statement. Whether you are buying or selling, you will at some point come face to face with a Section 32 Statement. As a buyer, you want to make sure your investment in a property doesn’t result in any nasty surprises. As a vendor, you need to provide it to either the potential buyer or their legal representative. If a Section 32 Statement contains incorrect information, this can allow a buyer to withdraw from the sale of the property and can even result in legal action. Therefore it is very important to get your head around this piece of legislation.
Usually, it takes around 3 to 4 weeks for a lawyer to compile a Section 32 Statement. If you are a vendor and you are planning to sell, account for this time to avoid any delay in marketing your property.
Why does a Section 32 Statement exist?
As part of the Sale of Land Act, a Section 32 Statement is intended to provide a purchaser with relevant information that may affect their decision to sign a contract of sale. It is important to remember that a Section 32 Statement is not a contract of sale. People sometimes confuse these two, but they are separate to each other and the signing of a contract of sale is dependent on a Section 32 having been already provided.
When does a buyer receive a Section 32?
Before a contract of sale is signed. A vendor’s legal representative will often provide their real estate agent with the Section 32 Statement, who will in turn provide it to any potential buyers and their legal representative.
The only signature that needs to be on it is the vendor’s, however, a real estate agent may insist that a potential buyer signs the statement as proof of the agent’s role in providing the statement to any potential buyers.
Note: in some cases, a sale of contract will state that the legitimacy of the contract is depended on the subsequent approval of a Section 32 Statement. In this case, the contract of sale is compromised and a buyer has the freedom to cancel their contract.
What is inside a Section 32 Statement and what should you look out for?
Section 32 is a sometimes-complicated piece of legislation. Always seek the advice of your legal practitioner. They will have the knowledge and experience in how to compile or read a Section 32 Statement. Your lawyer can help you identify what is inside the statement, how accurate it is, and most importantly: what is missing?
A Section 32 will often include:
- Vendor’s details
- Details of the title. This is a very important part of the statement and requires your attention.
Note: check the measurements of the property within the title. If it is a subdivided property especially, are you getting/selling what you think you are?
- Information regarding building permits for recent renovations to the property.
- Zoning information. Be sure that you are aware of whether it is a commercial or residential zone and what sort of residential zone it is.
- Notices of any upcoming works or orders issued by authorities. This is important in case of changes to the area that may affect you.
- Outgoings: these can include rates and body corporate/strata fees.
- Easements: these are areas of your land that someone else has the right to use for a specific purpose, even if they aren’t the landowner. This is most common in the form of drainage. Be aware of these easements as they may affect/compromise any future renovations.
This article originally appeared on realestateview.com.au.