When selling a home or an investment property, there are a number of expenses that you have to pay, such as marketing costs and commission.
So with a number of costs that you have no choice but to pay, why would you risk outlaying more than you need to?
Unfortunately, that is the situation for some sellers who, for some reason known only to them, fail to abide with legislation in Victoria.
A Section 32, or vendor’s statement, is a legal document in Victoria that requires certain legislated information to be disclosed to potential buyers.
If a seller does not disclose the required information it could end up costing them dearly. Let’s take a look, then, at some common Section 32 mistakes and the potential costs involved.
Failing to disclose all of the necessary info in your vendor’s statement
Given its legal importance, a Section 32 should always be prepared by a legal practitioner to ensure that it adheres to the relative legislation.
Information that must be disclosed in a Section 32 includes any mortgages on the property, the existence of any covenants and easements, council zoning, outgoings such as rates or body corporate fees, as well as any other declarations such as whether the property is located within a bushfire-prone area.
A Section 32 must be provided to prospective buyers before any contract of sale is signed.
Failure to disclose all the necessary information in the vendor statement can not only give a buyer grounds to walk away from the deal – it is also a criminal offence.
In addition, failure to comply with some of the rules can attract huge monetary penalties.
Who would risk such an outcome by not disclosing all the necessary information?
Not reading through every detail in the Section 32 form
Another common mistake that vendors make with the Section 32 form is not reading through it in detail.
You may be thinking that it is your lawyer’s responsibility, right?
Of course, your legal representative will professionally prepare and review the document, but a Section 32 is only as good as the information that you as the seller are prepared to disclose to them.
By reading through the details of the Section 32 form, you can double-check that the information included is correct. It is a seller’s form of due diligence.
Your legal representative, for example, will check details such as who is legally entitled to sell the property. That is, whose name is listed on the property’s title. If the property is jointly owned, then both party’s names need to be listed and both will need to sign the Section 32 form. Otherwise, it is invalid – unless a Power of Attorney or similar is in play.
Your legal representatives will also identify that what is being sold measures up with the relevant Certificate of Title. The Section 32 form should mirror the property details on the title, including the lot particulars.
Failing to obtain the best legal and financial advice in advance
Too many home buyers and sellers don’t think about obtaining the best legal and financial advice until the last minute.
Then they’re left scrambling to find someone to assist them when time is fast running out to close the deal.
One of the other most common mistakes with a Section 32 form is not seeking the right legal and financial advice in advance.
When you think about it, it makes sense to get all your property ducks in a row before you need them – and that includes professional legal and financial advice.