Regardless of whether you are contemplating buying or selling a property in Victoria, you will inevitably come across something called a Section 32, most commonly referred to as a Vendor’s Statement. From 1 October 2014 onwards, it is no longer a legal requirement that a Vendor’s Statement be attached to the Contract of Sale of Real Estate (“Contract”). The Vendor’s Statement is arguably the most important document to consider, because it will tell you a lot about exactly what you are buying or selling.
What you need to know as sellers:
If you are contemplating selling in Victoria, the first thing you need to tell your solicitor to do prepare is the Vendor’s Statement. It can take up to two weeks for the Vendor Statement to be fully completed, not because your solicitor is tardy, but because it can take up to two weeks for the required searches to be conducted and received from the relevant authorities.
You may ask your solicitor: why do I need to do searches? Who knows my property better than me; after all I’ve been living in it for years!” Well, the reason is fairly simple: If you want to protect yourself and ensure that the property transaction runs smoothly with the minimum hassle, you will do your initial searches so as to meet your disclosure requirements.
Now you may ask what disclosures? The full answer to that is something that might bore anyone other than a property lawyer or conveyancer to tears, but thankfully, there is a simple answer. Disclosures basically means that you need to tell your buyers the information that the relevant laws require you to provide to let them know what they are buying. This includes, for example, who owns the property, whether there are any caveats or other encumbrances such as easements affecting the property, what the rates, fees and charges levied against the property are, whether any building permits have been obtained, whether there is an owners corporation responsible for the management of the common property, whether the property is in a bushfire zone, are there any planning overlays affecting the property.
It is very important that you provide all the information necessary to prepare a complete Vendor Statement. An incomplete Vendor Statement may provide an opportunity for your buyer to get out of the Contract at anytime between signing and the settlement date. In most cases, the purchaser can do this without being liable to the seller. They won’t lose their deposits, won’t have to pay you any interests or fines, because they are simply exercising their right to withdraw from a Contract due to not being fully informed about what they are buying. There are of course rules surrounding this and if you find yourself in this circumstance, you should make sure you seek advice specific to your circumstances.
If this does eventuate you may incur extra legal fees as a result of having your solicitor dealing with the termination of the Contract, redrafting the Vendor Statement to make it complete and dealing with the sale of the property to another buyer. Beyond that you may incur additional advertising costs and potentially additional commission or fees from your real estate. That’s a few extra hundred dollars you might have spent better in the shops buying the things you love.
If you are interested in knowing exactly what you are required to disclose as the seller, you can go direct to the source, being Section 32 of the Sale of Land Act. Fortunately, you probably don’t need to, unless you’re looking for some reading material to send you to sleep at night! If not, we at ThinkConveyancing.com.au are here to explain it fully and completely to you.
What you need to know as buyers:
Before you rush into the real estate office to sign the Contract to buy your dream house, you need to stop, turn around, and talk to us at ThinkConveyancing.com.au before you do anything! Why? Because the last thing you want to do is spend the next 30 years paying back the mortgage for a dream house that’s no longer perfect after only a few years. Nor do you want to find out that you made a loss of tens of thousands of dollars when you have finally had enough of leaky roofs and creaky staircases!
Know that if you didn’t ask a solicitor to review the Contract before you sign it, you have effectively put yourself at the mercy of the seller and done yourself a huge disservice. It takes less than an hour for competent lawyers, such as ourselves, to read through the Contract and Vendor’s Statement and tell you exactly what you are intending to buy. We can tell you whether you can use part of the house as a workshop for your part-time job, whether you can build an extra garage at the back to put your third car into, whether you can repaint your house into your favourite colour. At this point, you might exclaim: “What?! Are you telling me I can’t even decide what colour my house is going to be?” Such a question is fully understandable, and yes, unfortunately you may be prevented from painting your house blue. However, you can find out if you can carry out your planned works well before you sign the Contract and before you spend your hard earned dollars on tradesmen hired to renovate your new home, only to receive a letter from your local council, advising that you need to not only stop your renovations, but to pay for the house to be returned to its original condition.
Beyond that, the Vendor Statement will tell you important information, such as whether the house was built within the last 7 years, whether builder’s warranty insurance is in place to protect you, whether the bungalow at the back was built with a permit, whether you are at risk of having your house burnt down in a bushfire – so that you can consider the price you wish to offer and other things such as buying the appropriate insurance policy etc… which of course, all goes to the practicality of being able to enjoy the full use of your new home.
A competent law firm such as ours, will also be able to tell you, based on our experience and a proper review of the disclosures, whether there are any other issues to consider. If you’re planning on doing building works, you’ll want to know if there’s a large easement running through the backyard which prevents you from building. You should be aware of any buildings which have been built over an easement, because as a general rule, you are not permitted to build over an easement. If an authority needs to access an easement, you will be responsible for the costs of removing the building works so access can be gained even if you didn’t build the building, shed or other structure. This can be a lot of money that you simply didn’t account for.
These are only a few things that we at ThinkConveyancing.com.au can inform you of, and do something about to make sure that you do not find yourself in an unexpected situation, incur unnecessary costs, spend your life’s savings on a property only to find yourself in a broken dream. We can ensure that you are fully informed when buying your first home or your fifth property for that matter. We ensure that you can rest easy throughout the window of time between signing the Contract and settlement, knowing that you are well taken care of and we are arranging all of the documentation. We can ensure you have the dream house you rightly deserve.
If you have any questions about Section 32, or would like to discuss our range of services, including preparation or review of a Contract of Sale and Section 32, feel free to call us on 1300 932 738. Our experienced Customer Concierge Team are standing by to answer any questions you may have.