What is a Section 32 and why should home buyers read it?

Understanding a Section 32

Legislation requires a seller to disclose specific information to a buyer about the property for sale – before a contract is signed.

This information is contained in a Vendors Statement (which is colloquially termed a Section 32’, this term stemming from the section of the legislation which mandates disclosure). The Section 32 lays out a range of information that isn’t capable of being ascertained by simply inspecting the property.

There are consequences if a Section 32 is not provided or is found to be incomplete or defective," Enticott says. If proper disclosure is not made, the buyer may have the ability to pull out of the contract, she explains.

Enticott explains that "this document should be prepared by a lawyer or licenced conveyancer for the seller and reviewed by a lawyer or licenced conveyancer for the potential buyer prior to signing contracts”.

When is a Section 32 needed?

Buying a house is a big decision. If you find a property that you like, as a potential buyer you should request a copy of the Section 32. Requesting a Section 32 usually indicates to the seller that you have a serious interest in the property and you may consider making an offer if satisfied with the information provided.

“Where a Section 32 vendor statement is accurately provided prior to signing contracts, the seller has the right to enforce the fully signed contract against the buyer. A seller may not be able to enforce the terms, such as retaining the deposit where a buyer fails to meet their obligations unless proper disclosure occurred," Enticott says.

What is included in a Section 32?

A seller is required by law to disclose prescribed 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 Enticott, there could be a dozen or so certificates and documents accompanying this statement including the Title search and copy of the legal Plan of the property.

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

The Section 32 statement contains information about the property’s title, including:

• Statutory warnings to the buyer
  
• The seller’s details
• Title details
• Information regarding building permits issued in the past seven years
• Particulars of any owner-builder warranty insurance
• If the seller 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 when the Section 32 is received?

The buyer will need to make sure that the Section 32 document is reviewed by their lawyer or licensed conveyancer before the contract of sale is signed. 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 in a Section 32?

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

Next steps after reviewing a Section 32

Once this document has been reviewed, the seller will need to sign the document before providing it to the potential buyer. “Often the buyer will be asked to sign an acknowledgement that they have received and viewed the Section 32 vendor prior to signing contracts. When any dispute arises, the buyer will be considered aware of any matter disclosed in the Section 32 so it is important that the buyer seeks guidance from their legal representative prior to buying,” Enticott says.

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