Section 32 Sale of Land Act requires vendors of real estate in Victoria to give purchasers, before a purchaser signs the contract of sale, a Vendor Statement that must provide information and details on the property offered for sale fully disclosing aspects of the following:
This disclosure document must provide accurate information and which is not misleading or deceptive. The Vendor Statement must be correct in every particular on the day the Vendor gives the document to the purchaser. In the event that details change because of the effluxion of time, the Vendor cannot risk providing out of date details, as even an innocent mistake will result in misleading and deceptive conduct entitling the purchaser to avoid the contract of sale.
The Vendor must update the Vendor Statement if there is a change in any of the information (e.g. change in rates, change in tenancy, or if a service is disconnected). If the Vendor does not give a Vendor Statement, or knowingly or recklessly gives false information in the Vendor Statement, the purchaser can end the contract of sale and sue the Vendor for damages.
If the purchaser validly ends the contract of sale, the Vendor must return the deposit to the purchaser and be liable for the selling agents’ commission on the sale, the purchaser’s legal costs, and any other expenses the Vendor incurred with the sale.
DUE DILIGENCE & PREPARATION OF VENDOR STATEMENT
The due diligence and information that is essential for the preparation for the Vendor Statement is comprehensive and can be complex depending on the type of property being offered for sale. Serious Vendors who do not want to risk avoidance of the contract of sale, or a claim for damages plan and co-ordinate the preparation with their lawyers and selling agents in advance of placing the property on the market.
CHATTELS & IMPROVEMENTS
Most contracts of sale of land offer the buildings and chattels for sale on an “as-is-basis,” which entitles the Vendor to deliver them to the purchaser at settlement in their state of repair (fair wear and tear excepted) as at the date of the contract of sale. These contracts stipulate that failure to deliver the chattels (and only the chattels) will only give the purchaser a right to compensation. Vendors selling land with improvements, such as buildings, under a contract of sale will contain conditions ensuring there is insurance on all buildings sold with the land from the date of the contract of sale to the date of settlement against damage or destruction for full reinstatement value. This will minimize the Vendor’s loss if damage or destruction occurs to those improvements before settlement.
Most contracts provide “the purchaser may inspect the condition of the property and the chattels at any reasonable time during the period of 7 days preceding the settlement date.” Wise Vendors ensure they repair and make good, before the period starts any damage to improvements and chattels since the date of the contract of sale.
Vendors who have sold a property before the completion of construction of buildings on the property would, by virtue of the above provision, be best served if they make sure that construction works are fully completed before that period commences.
COOLING OFF PERIOD
Purchasers have a right to a Cooling-Off Period for all residential non-auction sales even if the price exceeds AUD$250,000.00. Purchasers can withdraw from the contract of sale within three business days of signing it, if none of the exceptions applies. To end the contract of sale within this time, the purchaser must either give the Vendor written notice ending this contract of sale. If the purchaser ends the contract of sale in this way, the purchaser is entitled to a refund of all the money paid, except for $100.00, or 0.2% of the price (whichever is more).
EXCEPTIONS TO COOLING-OFF PERIOD
The right to Cooling-Off does not apply to:
Auction sales and sales made within three business days before or after an auction or
Industrial and commercial properties or
Residential sales where the purchaser obtained legal advice before signing the contract of sale or
The purchaser and the Vendor previously entered a similar contract of sale for the same property or
The purchaser is an estate agent under the Estate Agents Act 1980 (as amended) or a body corporate.
NEED MORE INFORMATION
Behan Legal advises and assists on these important issues. For an appointment, call 03 9646 0344