What's a Section 32, and why buyers should read it?

Understanding a Section 32

Legislation requires a seller to provide specific information to a buyer about the property for sale – before a contract is signed. If this isn’t done, the buyer may have the ability to pull out of the contract, Fung explains.

"There are consequences if a Section 32 vendor statement is not provided or is found to be incomplete or defective," he says. “This legal document provides a potential buyer with details about the property they need to understand before signing a contract to purchase the property. Otherwise known as a vendor’s statement, essentially, the Section 32 lays out information that isn’t capable of being ascertained by simply inspecting the property.

Fung explains that "this is a separate document that should have been completed by a lawyer for the seller, or reviewed by a solicitor for the potential buyer to ensure all of the correct and required information is included.” 

When is it needed?

The Section 32 can be requested by a potential buyer ahead of an offer being made. Requesting a Section 32 tells a vendor that someone is interested in the property and that they might like to make an offer. “Where a Section 32 vendor statement is accurately provided, the seller has the right to enforce the contract against the purchaser after it is signed by the parties, including retaining the deposit after the cooling-off period expires if the purchaser decides to walk away from the transaction," Fung says.

What is included?

A vendor is required by law to disclose all relevant information about their property in this document. Not providing the detail is not only illegal, but it can also enable a potential buyer to back out of the sale, which is a huge headache for both parties. The Section 32 is often made up of several different documents about the property. Depending on the property's age and the number of developments or renovations that have been undertaken, says Fung, there could be a dozen or so documents accompanying this statement. 
 

Reading and understanding your Section 32 is paramount before moving in to your new home.

The statement contains information about the property’s title, including:

• Statutory warnings to the purchaser
  
• The vendor’s details
• Title details
• Information regarding building permits issued in the past seven years
• Particulars of any owner-builder warranty insurance
• If the vendor is the owner-builder who completed building works, a written inspection report listing any defects as well as details of the insurance for the works done should be included
• Details of any mortgages over the land
• Information about covenants, easements and any other restrictions, regardless of whether they appear on the title
• Planning information, such as zoning restrictions to land use
• Disclosures about any notices or orders issued by the authorities. This could relate to fencing, road-widening, sewerage, for example
• Details about access to the property by road
• Information about services connected to the property includes water, sewerage, power, an antenna on the roof, and internet connection

What happens next?

The buyer will need to make sure that the Section 32 document is reviewed by their legal representative or licensed conveyancer before the contract of sale is signed. This process doesn’t happen overnight – it could take a few days or more for this document to be scrutinised by your lawyer, Fung says, adding that “the buyer needs to review the Section 32 statement carefully and send it over to their lawyer. A close review is recommended so that the buyer is not later surprised about any matters affecting the property.”

Make sure you have a thorough understanding of the Section 32 before making an offer. Image: Getty. 

What if something is missing?

Your lawyer or conveyancer will look over the Section 32 and check if there are any documents missing. They will request any additional documents needed, and help you make an informed decision about the sale.

Next steps

Once this document has been reviewed, the seller will need to sign the document before providing it to the potential buyer. “Some real estate agents may also require that the buyer sign the Section 32 vendor statement as proof that the statement was in fact provided by the agent,” Fung says.

If you want to move forward, the next step is making an official offer. This is usually done in writing.