Did you know that the Section 32 is a compulsory document required by all sellers of real property in Victoria? Most people from Victoria have head about it, but in our experience here at Think Conveyancing very few understand its purpose and how it protects them, especially Sellers. Usually an after thought or on request of their real estate agent, clients contact a conveyancer and ask for one to be prepared.
Honestly, its hard to buy a service if you don’t understand what it is your buying. So lets break this down.
The Section 32 is a disclosure document. This means it is a document designed to inform any potential purchase about all the details relating to the property they are considering investing it. It includes a title search, details of overlays or use restrictions on the property, council rates, water rates and anything else that is material to the purchaser.
It is this Section 32 AND the Contract of Sale, that sets up the terms of engagement for the entire Transaction. From a lawyers perspective, together they constitute ‘an invitation to treat’, being an invitation to make an Agreement as to purchase.
SO, you go to market, invest heavily in advertising – both online (realestate.com.au, domain.com.au etc etc) and offline producing printed material and you manage to entice a purchaser into making an offer on your property. FANTASTIC. Once signed up to the Contract you feel confident that you have a deal!
NOW, imagine however if either the contract of sale or the section 32 are FLAWED. Meaning you failed to you as the SELLER, fail to disclose something or fail to ‘adequately disclose’ something in the section 32. Surprisingly this often happens. For example somebody doesn’t disclose that certain renovations didn’t receive council sign off OR certain services are no longer connected to the property. It seems innocuous enough, but in reality it isn’t! This failure to disclose gives the purchase rights in the window between signing and settlement, which they may not otherwise have had access to. The most extreme of which is the right to rescind (end the contract).
The window between signing and settlement is one of the most delicate in a transaction. It is a time when the agents have stepped away from what is considered to be a binding agreement and the purchaser is left to consider the decision they have made. This can give rise to some buyers remorse…. Not sure what buyer remorse is…. Well think about the last time you were on a diet and whilst you were out, you snuck in a massive icecream from Messina Gelato or one of those other temples of icecream deliciousness! The feeling after you are finished of regret is Buyers Remorse. Only when it comes to the purchase of a house it usually has a $500.000+ price tag on it! So you can image the emotions being felt. This gives rise to some at times, strange purchaser behaviour.
How do I know this, well honestly, people call Think Conveyancing all the time the day after an auction or having signed a contract of sale a few days earlier and want to get out of it. Now, in the absence of a defective Section 32, the purchasers options are extremely limited and costly.
With a defective Section 32. The options are many and without financial penalty.
The Importance of BINDING AGREEMENT to a Seller.
As the Sellers advocate, our responsibility is to bring as much security to a transaction as possible. The best way to do this is to invest in a series of searches and to ensure that you a seller complete a comprehensive questionnaire that brings out ALL necessary disclosures. This protects you.
It is this protection that has been the cornerstone of our practice.
Our clients can take confidence, that when we prepare a Section 32 and Contract of Sale and they subsequently invest Tens of thousands of Dollars into a SALE Campaign, that we can achieve a binding agreement through to settlement.
Many firms can’t say the same.
TIP. If you are ever asked to provide a copy of your rates notice, water bill or electricity bill, it should go hand in hand that your representative being it Lawyer or Conveyancer, should explain to you the increased risk exposure they are asking you to take on this transaction. The decision is not about your best interest, it is about winning your work at any cost, and the cost / risk is yours.
So, next time you wonder how a Section 32 is going to help you the Seller – consider a well drafted Section 32 an insurance policy for the protection of your investment in the marketing your property and identifying a purchaser. What we do, really can be the difference between a sale going ahead or falling over.
Read more at Think Conveyancing.