In today’s episode, we are breaking down everything that you need to know about property contracts and a section 32 statement when it comes to buying a property in Victoria.
What is a contract in the context of purchasing a property?
A property contract is a legally binding agreement between you and the seller, which outlines the terms and conditions of the sale.
What does the property contract cover?
The fancy word for it is a Contract of Sale, and it covers important aspects of your transaction, such as:
- property details,
- what’s the address,
- what’s the volume folio number,
- purchase price,
- deposit amount,
- settlement date (the date that the property is transferred to you)
- and it also contains lots of different conditions that you agree upon.
It is of the utmost importance that the contract is reviewed by a seasoned conveyancer or a property lawyer before signing the contract, to check if there’s any red flags, anything we think you should be negotiating to protect you.
Check out our first podcast episode about the importance of a contract review, one of the most fundamental due diligence exercises that you need to take when it comes to buying a property.
Section 32: Vendor Statement
The second document is called a section 32 statement. It’s also known as a Vendor Statement. It’s usually presented to you by the real estate agent alongside the contract. The Section 32 is a document that the seller must by law provide to you before you sign the property contract.
It contains essential information about the property by law. It’s basically the vendor saying I’m disclosing a whole bunch of things by law about this property so you can make an informed decision.
What Does Section 32 Consist Of?
Section 32 should include the following:
- Zoning details that can impact future plans for developing the property,
- Planning restrictions
- Building notices or orders that might be affecting the property
- Rates and running costs include water rates, council rates, land tax, and corporate or owner’s corporation fees.
- Other factors that can affect the property’s value.
You should look out for any encumbrances or easements. Encumbrances can impact the cost of the ownership or the use of the property.
Easements, like drainage pipes, can impact development plans. Both, encumbrances and easements should be disclosed in the section 32 by the seller.
Before signing the contract, you should check all the financial obligations associated with the property, such as rates and taxes. You want to make sure that they’re all disclosed accurately.
It’s important that we review the contract and the section 32 statement because we, on your behalf, will be able to look out for all the things mentioned above and advise you on any risks that can impact your cost, ownership, or the use of the property.
Important Steps Before Signing the Contract
You’re not alone in doing your due diligence exercises. Transparency is the key when it comes to property transactions. The good news is that there are steps you can take to ensure that you’re making an informed decision based on the information that’s presented in section 32.
Due Diligence
You should conduct a thorough due diligence like obtaining a building and pest inspection before buying the property to uncover any potential issues with the property that’s not disclosed in your section 32.
Check out our podcast episode about due diligence and building and pest inspection.
Seek Legal Advice
It’s essential to seek advice from legal professional or an experienced conveyancer to fully understand the implications of the information provided in the contract and the Section 32.
Based on all said, understanding property contracts and Section 32 is critical for buyers and sellers in Victoria. It’s about ensuring transparency, mitigating the risk, and making informed decisions throughout the property buying process.
if you’ve got any questions, or if there’s a topic you’d like us to cover in future episodes, please reach out to us here or via our social media channels: LinkedIn, Facebook, Instagram, and Tik Tok.
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