A Customer Guide to Changes in the Section 32

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In Victoria, the seller of a property is required to disclose important information about the property to prospective buyers, such as rates, taxes and charges, mortgages and more. The document which provides for these disclosures is called a Vendor’s Statement (also called a ‘Section 32’). This document is prepared by the seller’s conveyancer or solicitor who represents them in the sale of their property. The information required to be disclosed can be found in Section 32 of the Sale of Land Act 1962.

The Victorian Government has made recent changes to the Section 32, which came into effect on1 October 2014. If you are looking to sell your home, it is important that you are familiar with these changes, as they may affect the disclosure requirements you must make about your property in the Section 32. If you’re looking to buy, you too will benefit from knowing what these changes are, as it will allow you to make a more informed decision on your next purchase.

conveyancing servicesDo these changes apply to your sale or purchase?
If the Section 32 was signed before 1 October 2014, it can continue while the property ‘remains for sale’, without having to adopt the new changes. However, a Section 32 adopting the new changes will be required in the following circumstances:

  • Where the property is withdrawn from sale after the 1 October 2014 and subsequently re-offered; and
  • Where the Section 32 is signed after 1 October 2014.

Key Changes

Pursuant to the Sale of Land Amendment Act 2014 (“Amendment Act”), some key changes will apply as set out below:

The Section 32 no longer needs to be attached to the Contract of Sale, it can be attached or free standing

Once the Section 32 is prepared by the seller’s representative together with the Contract of Sale, it is delivered by them as one document to the real estate agent for potential buyers to have reviewed by their solicitor (if you’re buying, engage us and we can conduct a review for you!). Regardless of who wanted the Section 32, it was always required to be attached to the Contract of Sale and could not be sent as a separate document. From the 1 October 2014 the law has changed, and the Section 32 can be delivered separate to the Contract of Sale as a freestanding document.

The seller can electronically sign the Section 32

Prior to 1 October 2014, sellers could only hand-sign the Section 32. Given we are living in the technology era, this change was inevitable and sellers can now electronically sign the Section 32.

Planning overlays must be disclosed in addition to the relevant scheme and zoning

A planning scheme sets out the particular zones and overlays that apply to an area of land, usually in the form of a map. The area you live in has a zone, which specifies a particular purpose for the land. For example, you may be living in a residential zone. Other purposes include business, industrial, or perhaps a combination or business and residential. If you are buying or selling land of importance, such as an area of land with heritage or environmental significance, the planning scheme will be subject to ‘overlays’. These are extra rules which control what you can and can’t do over on the land, and from 1 October 2014, will need to be disclosed in the Section 32 in addition to the relevant planning scheme and zoning.

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‘Notices, orders, declarations, reports or recommendations of public authorities or approved proposals affecting the Property’ will now only require disclosure where they ‘directly and currently affect the Land’

Before the introduction of this change sellers were required to make this disclosure, irrespective of when it affected the land. Now it is only required in the Section 32 if it ‘directly and currently’ affects the land. If you’re uncertain about the meaning of these disclosures, that’s ok, as it is your conveyancer or solicitor’s job to be familiar with them and to make the information available in the Section 32 for you.

Supply authorities (eg, water authority) no longer need to be disclosed for services

It used to be a mandatory requirement that supply authorities be disclosed. ‘Supply authorities’ are authorities that supply services to the Property (for example, a water and sewerage or electricity supply company).After the 1 October 2014 you no longer need to disclose them in the Section 32!

Only services which are not connected require disclosure

Following on from my previous explanation, if for example electricity and gas is connected to the property but the telephone isn’t, the seller only needs to disclose the telephone as not connected. All other connected services do not require disclosure.

The buyer can terminate the Contract of Sale if no Section 32 is given at all

It is a mandatory requirement that the Section 32 be provided to the buyer. The law now states that if it is not provided, the buyer can end the contract. As a result, the buyer is no longer contractually bound to purchase the property and can go their separate way. From a buyers’ perspective, the Section 32 together with the contract is an important document to have, so that you are informed about what you’re buying. Remember, what you see in a picture on a real estate shop front is not always what you get. From a sellers’ perspective, if you provide the buyer with a Section 32 that includes the appropriate disclosures, you can be satisfied knowing that the buyer won’t end the contract for failure to provide them with a Section 32.

If an Owners Corporation is inactive, the seller must say so

An Owners Corporation manages common property such as driveways, lifts, passages etc which more than one resident uses. Common property is usually found in a block of flats, apartments or units, with each resident a member of an Owners Corporation. Where there is an active Owners Corporation managing the property, certain information must be provided in the Section 32 such as the Owners Corporation levy that must be paid by residents, when that payment is due, and minutes from the most recent Annual General Meeting of members. This can be provided by way of an Owners Corporation Certificate usually prepared by the Owners Corporation Manager.

An ‘inactive’ Owners Corporation is one that has not been active in the last 15 months. That is, that there has been no Owners Corporation insurance or fees paid throughout that period. If the Owners Corporation is inactive, then the Section 32 must say so.

The various warning notices which are currently included in a Section 32 are replaced by a ‘Due Diligence’ regime for buyers of vacant residential land or land on which there is a residence.

The seller or its agent must ensure the Due Diligence Checklist (published by Consumer Affairs Victoria) is made available to prospective purchasers at the time in which the Property is offered for sale. This checklist cannot be amended in any way and must appear in the form published by Consumer Affairs Victoria.

Links to Consumer Affairs website

For more information about the recent changes to the Section 32, please see the following links to the Consumer Affairs Website:

General Information on the Due Diligence Checklist – http://www.consumer.vic.gov.au/news-and-events/media-releases/new-checklist-to-help-homebuyers-media-release

Section 32 Information – http://www.consumer.vic.gov.au/news-and-events/news-updates/section-32-changes-legislation-update

Due Diligence Checklist – http://www.consumer.vic.gov.au/housing-and-accommodation/buying-and-selling-property/checklists/due-diligence

If you have any queries about the changes to the Section 32, or would like to discuss our range of services, including preparation or review of a Contract of Sale and Section 32, please don’t hesitate to call us on 1300 932 738 or chat with us online at www.thinkconveyancing.com.au. Just one of our services to you at ThinkConveyancing.com.au

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