Anyone who sells land in Victoria is required to disclose certain information to the purchaser by providing a disclosure statement in accordance with Section 32 of the Sale of Land Act 1962 (Vic). This statement is commonly known as a ‘Vendor’s Statement’ and must be provided to the purchaser before the Purchaser signs a Contract of Sale.
Why is a Vendor’s Statement required?
A Vendor’s Statement discloses information not readily found by inspecting the property.
There is certain information that is known to the Vendor that is difficult for a Purchaser to discover, even after undertaking due diligence. This information gap puts the buyer at a disadvantage in deciding whether to buy a property and what price to pay.
The Vendor’s Statement increases the amount of information available to purchasers and will assist them in negotiating to purchase the property.
Examples of things not covered in the Vendor Statement include:
- Information on the condition of buildings;
- Whether the buildings comply with building regulations;
- The accuracy of measurements on the title.
Preparation of the Vendor’s Statement
A Vendor’s Statement is a legal document and accordingly it must be factually accurate and complete. If it contains false, incorrect or insufficient information a Purchaser may be able to withdraw from the sale or take legal action.
The Vendor’s Statement should always be prepared by a qualified lawyer to ensure that everything that needs to be disclosed is disclosed.
It is an offence for a Vendor to knowingly or recklessly supply false information or fail to supply all of the information required to be given in a Vendor’s Statement.
It is also an offence to fail to give a Purchaser a Vendor’s Statement signed by the Vendor before the purchaser signs the contract of sale.
If the Vendor commits any of the prescribed offences, a Purchaser may be able to cancel the Contract of Sale which has been entered into on the basis of the inaccurate information contained in the Vendor’s Statement.
To avoid the risk of a Purchaser cancelling the contract, it is essential that the Vendor’s Statement contains the required information in accordance with Section 32 of the Sale of Land Act 1962 (Vic).
What to look for in a Vendor’s Statement
The Vendor’s Statement should be looked over carefully prior to signing the Contract of Sale. Particular attention should be given to the services connected to the property, the amount of outgoings payable, the existence of any easements or covenants affecting the land and any building works carried out on the property. If you’re considering buying a property, it’s critical to get the Vendor’s Statement checked by your own lawyer prior to signing the Contract of Sale.
Consumer Affairs Victoria has developed a checklist to help identify a range of issues that may affect a property or impose restrictions or obligations on the property.
This checklist aims to help you identify whether any of these issues will affect you if you buy the property.
The checklist includes items that should be considered by a purchaser such as:
- Living in an urban environment;
- Buying into an owners corporation;
- Buying in Growth areas;
- Flood and fire risk;
- Issues affecting rural properties;
- Earth resource activity, such as mining;
- Soil and groundwater contamination;
- Land boundaries;
- Planning controls affecting how the property is used, or the buildings on it;
- Proposed or granted planning permits;
- Building permits;
- Aboriginal cultural heritage and building plans;
- Insurance cover for recent building or renovation works;
- Connections for water, sewerage, electricity, gas, telephone and internet.
The Due Diligence Checklist must be made available to any prospective purchaser from the time the land is offered for sale. It is the estate agent’s responsibility to provide the Checklist if a licensed estate agent is acting for the Vendor, otherwise, the vendor is required to provide the checklist. If prepared by our office, the Vendor’s Statement includes a copy of the Due Diligence Checklist as a matter of practice.
Does the checklist cover everything?
The checklist issues are only a starting point for the searches and enquiries that should be made when purchasing a property and you should always seek help from a lawyer if you are unsure how to proceed.
If you are buying or selling property or would just like more information on the law governing Vendor’s Statements, please call us on (03) 5941 1622 or email firstname.lastname@example.org.