An Overview on Section 32 Statement

A Section 32 Statement is a statement that generally forms part of a Contract for the Sale of Land and is prepared by the Vendor in a sale of real estate. The term is often also stated as a Vendor Statement, or Section 32 Vendor Statement. However, the term originates from the Sale of Land Act 1962 (Vic) prescribing mandatory disclosure obligations.

In this article, we address frequently asked questions that prospective purchasers and vendors of land may have as to the disclosure requirements, including:

When inspecting property, a contract may be provided by the vendor’s conveyancer or real estate agent. There will generally be a Section 32 Statement included in that contract. The statement contains important information that prospective purchasers should know and be aware of.

What is a Section 32 Statement?

In 1983, the prescribed statutory requirements of a Section 32 Statement were first introduced in Victoria. The original enactment, Sale of Land (Amendment) Act 1982 (Vic) [repealed], listed disclosure expectations for vendors before a purchaser signed a contract. The historical provision (repealed) stated that:

32. (1) A vendor under a contract for the sale of land shall –

(a) give to the purchaser before he signs the contract a statement signed by the vendor; and

(b) includes in the contract a statement –

containing the matters specified in sub-section (2).

In Victoria, the Sale of Land Act 1962 (Vic) continues to regulate the prescribed information that must be disclosed to prospective purchasers of land in a Section 32 Statement. Specifically, section 32 of the Sale of Land Act 1962 (Vic) sets out a vendor’s legal obligation, as follows:

A vendor under a contract for the sale of land must give to the purchaser, before the purchaser signs the contract, a statement signed by the vendor that contains the matters and attaches the documents specified in this Division.

What are the general issues involved in a Section 32 Statement?

Generally, information disclosed in a Section 32 Statement should provide a purchaser with information on real issues that may affect the property. These may include:

As purchasing a property is a significant, purchasers should perform due diligence of any prospective purchase. Proper due diligence is encouraged, and this view is also reflected in the Sale of Land Act 1962 (Vic)’s statutory definition of “due diligence checklist”:

A due diligence checklist is a checklist prepared for prospective purchasers of vacant residential land or land on which there is a residence to assist purchasers in identifying information they may wish to obtain in respect of the land for sale.

What are practical examples to be diligent when inspecting a Section 32 Statement?

We list two (2) hypothetical examples on what may happen if a Vendor’s contract for the sale of land does not fully disclose relevant prescribed information required in a Section 32 Statement, or a physical inspection of a property reveals new information that was not known in a Section 32 Statement.

What are the disclosure requirements in a Section 32 Statement?

Relevantly in Part 2 – Division 2 of the Sale of Land Act 1962 (Vic), it contains 18 separate sections relating to a Section 32 statement. In summary, relevant disclosures should include the following matters:

The disclosures required to be included in a Section 32 Statement may affect prospective purchasers as they relate to land.

How is a Section 32 Statement obtained?

A Section 32 Statement is generally prepared by a lawyer when engaged by a prospective vendor for the sale of their land. As the Section 32 Statement has mandatory disclosure requirements prescribed by the Sale of Land Act 1962 (Vic), it is recommended that legal advice is sought. A lawyer should appropriately advise what is required to be disclosed in a Section 32 Statement alongside any contract for the sale of land.

Can the disclosure requirements of a Section 32 Statement be modified, excluded or restricted?

A provision in a contract for the sale of land that excludes, modifies or restricts any provision of Part 2 – Division 2 of the Sale of Land Act 1962 (Vic), specifically, the division that relates to disclosure requirements for a Section 32 Statement, will be void, and have no effect.

When should a purchaser receive a Section 32 Statement?

A purchaser should receive a Section 32 Statement when they are provided a copy of the Vendor’s contract. The Section 32 Statement is prepared by the Vendor and is available before the purchaser signs any contract. Both documents should be readily available for inspection.

There are also practical considerations when inspecting a Section 32 Statement. These include:

• when inspecting a Section 32 Statement, the statement should be signed by the vendor;
• a Section 32 Statement should be disclosed before a prospective purchaser signs a contract for the sale of land;
• a prospective purchaser will be asked to acknowledge and sign a Section 32 Statement.

Generally, a prospective purchaser should not sign a contract for the sale for land without first reviewing the Section 32 Statement. This is because the Section 32 Statement may disclose issues not known when a physical inspection was first performed.

What are a Vendor’s general obligations as to their Section 32 disclosure requirements?

In general terms, the Sale of Land Act 1962 (Vic) prescribes that a Vendor should not knowingly or recklessly provide false or incomplete information in a Section 32 Statement, or should not fail to provide a Section 32 Statement. This is thematically summarised below:

What happens if a Section 32 Statement does not fully disclose relevant information?

If a Section 32 Statement has false information, does not fully disclose the required information, or has not been signed the vendor, then there are remedies available for a purchaser. This includes terminating a contract before the purchaser accepts title and becomes entitled to possessing that land.

However, if a purchaser is considering terminating the contract, then there are situations that a prospective purchaser may not terminate. These events are based on a factual assessment on whether:

• the vendor has acted honestly and reasonably and ought to be fairly excused; and
• as a prospective purchaser, the prospective purchaser is in a substantially good a position as if the Sale of Land Act 1962 (Vic) had been complied.

Before terminating any contract for the sale of land, legal advice should be first sought on the situation.

What should a prospective purchaser inspect before purchasing a property?

As a prospective purchaser of land, it is recommended that:

• there is an inspection and review of the contract for the sale of land;
• there is an inspection whether the vendor has signed their Section 32 Statement; and
• seek legal advice as early as possible for the review of the contract for the sale of land, and Section 32 Statement, to assess any legal issues that should be made aware of.

Notes and Further Information

On topics relating to building and construction that may affect disclosure obligations relating to a Section 32 Statement:

On other topics also relating to disclosure obligations:

Related Entries

Caveat | Heritage Listed Property | Disclosure (Planning Controls and Approvals) | Cultural Heritage Significance | Termination | Legally Binding Agreement | Planning Permit | Zones and Overlays |

Authored by:
Ben Franklin, Managing Partner (LIV Accredited Specialist – Property Law), & Matthew Tran, Lawyer.