REVIEW OF
SECTION 32
REIV Response to the review of section 32 of the Sale of Land Act 1962
PAGE 1
Introduction
The Real Estate Institute of Victoria (REIV) is the peak body for the Victorian real estate profession.
Our mission is to lead the industry and promote the delivery of professional services by our Members to
the public and to ensure the integrity, credibility and ethical standards of the real estate industry.
With over 70 per cent of all Victorian real estate agencies as Members the REIV is acknowledged as the
preeminent expert on all matters relevant to the buying, selling and leasing of property and business.
Section 32 and real estate
The requirements of section 32 are a well accepted and relevant part of the process of selling and buying
real estate. This was highlighted by a former President of the REIV who in a submission wrote;
“The Sale of Land (Amendment) Act 1982, which introduced the concepts of vendors statements
and cooling off, was probably the most important ongoing piece of legislation affecting estate
agency practice in the past 40 years, with the possible exception of the Residential Tenancies Act
1980 and the Sale of Land Regulations 2004.
“Whilst highly controversial at the time, the 1982 amendments profoundly streamlined estate
agency procedures and led to a significant increase in knowledge and skill levels, not only of
agents but also of vendors and purchasers.”
This quote encapsulates the general view of the REIV on the need for vendors’ statements and
underscores why the review should aim to improve them as opposed to remove or further complicate
them.
In responding to the questions raised by the consultation document the REIV makes the following
recommendations;

continue to ensure the vendors statements are not used to require disclosure of matters that are
unclear or not directly related to physical aspects of the property;

remove the lack of clarity in S32(2)(e) concerning ‘Notices, orders, declarations, reports and
recommendations’ so that vendors are only required to disclose matters of which they have been
directly advised of;

allow the disclosure to be provided in an electronic manner;

update the language of the act and ensure it is gender neutral;

clarify that statements provided to potential purchasers need not be individually signed by the
vendor;

require authorities to issue forms in plain English;

introduce expiry dates for vendor statements;
REIV Response to the review of section 32 of the Sale of Land Act 1962
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
introduce standard fees for all municipal certificates;

require agencies, municipalities and owners corporations who issue certificates to do so in a
maximum time with penalties for failure to do so; and

undertake a review owners corporations fees with the aim of lowering the fee when multiple
certificates are required.
An additional item which is not raised in the review documentation is the mooted requirement for
disclosure of the energy and water use of the dwelling to be disclosed, presumably in the vendors’
statement. Since the Commonwealth consulted on this matter over 15 months ago no response has been
provided. The REIV is aware of documentation from legal practitioners that asks vendors to disclose
these matters on the assumption that it is going to be a requirement. This uncertainty effects confidence
in the statement the State should petition the Commonwealth to announce that the requirement will not be
introduced.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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Response to questions
2 – Context for the review: the Government’s commitment to reduce red tape
What is the average cost to the vendor of the requirement to provide a vendor statement?
The REIV does not have sufficiently detailed information to provide a conclusive response to this
question. Invariably it is legal practitioners and conveyancers who undertake and charge for the
preparation of the vendor statement
3 – The need for disclosure
Has the current vendor statement led to purchasers being more effectively informed about issues
affecting the land for sale?
Yes, the general requirement for disclosure has resulted in purchasers being better informed.
Do potential purchasers read, understand and use all aspects of the vendor statement to assist
them in making a decision to purchase a property?
This does not differ from the approach of the general population on contracts and agreements. Some will
ensure they fully understand the statement; some will seek formal advice whilst others will only briefly
review it.
It is obviously preferable if all purchasers read, understand and made use of the valuable information
provided. It is the Institute’s view that by simplifying the wording of the statement, more purchasers would
be likely to make full use of the information.
Is it common for purchasers to undertake a high level of due diligence in considering a property?
The depth of the due diligence depends on the individual purchaser and the property.
Do potential purchasers verify the information disclosed by a vendor to ensure its accuracy?
Prior to signing a contract our members do not find it is a high priority for purchasers. Verification is more
likely to occur once a contract and vendor’s statement have been provided to a purchaser’s legal
practitioner or conveyancer.
Does disclosure of any or all of the vendor statement information affect a prospective purchaser’s
decision as to whether to purchase a particular property?
Yes.
Do the red tape and compliance costs of all point of sale disclosures outweigh the benefits?
No, the existence of the requirement to disclose does not create red tape or compliance costs that
outweighs the benefits. This should not be taken to mean the current level or form of disclosure cannot be
simplified or improved and that expense created by ‘red tape’ cannot be eliminated or at least reduced.
This question also highlights that the costs of the section 32 preparation are, at least in the initially paid
for by the vendor whilst the benefits apply to the purchaser and also to potential purchasers.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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This can make it difficult to undertake a standard cost benefit analysis. This is especially the case given a
disclosure that may be deemed a ‘fault’ by one purchaser but not to another. The common drainage
easement is a typical example of this.
Can the presence of the vendor statement (and associated rights of rescission) lead potential
purchasers to take a complacent approach on the assumption that they are ‘protected’ by the
vendor statement?
In a range of matters it is the case that consumers feel ‘protected’ by disclosure or legal documentation.
The same applies in real estate and can be partly addressed by improving the accessibility and language
of the statement.
Is the right balance being achieved between the interests of buyers to be informed and the
financial costs of disclosure to the seller?
Feedback from REIV Members is that the right balance is being struck.
4 – The timing of disclosure
What are the costs and benefits in attaching the vendor statement to the contract of sale?
So far as cost is concerned, in most cases the same legal practitioner or conveyancer prepares both the
contract of sale and Vendors Statement (and in fact the Vendors Statement is part of the contract) the
costs are no more than would apply for the preparation.
The benefits of attaching the statement to the contract are in many ways obvious as to separate them
would reduce the effectiveness of the disclosure, especially if it was not viewed in conjunction with the
contract.
In practice, are potential purchasers given sufficient time to assess the details of a vendor
statement before committing to a purchase?
Yes.
Is it general practice for properties to be placed on the market before the vendor statement is
completed?
In the experience of REIV Members this is a very common occurrence, as vendors often are
understandably eager to sell and the time it takes to prepare the statement is subject to delays in the
provision of required information by the relevant authorities.
What would be the impacts (in particular the likely costs to vendors) of mandating that the vendor
statement be prepared before a property is placed on the market?
The direct costs to the vendor are likely to be no more than as at present, however, it will create
unnecessary ‘red tape’ and unacceptable delays to a marketing campaign.
It is not clear such a requirement will provide any benefit as the marketing campaign is about attracting
potential purchasers in an often crowded marketplace.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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For purchasers the process of property selection involves many stages prior to the detail of the vendor’s
statement being required. For instance, the following steps generally occur prior to a decision being made
to make an offer:

selecting the area/areas;

selecting the type of property; and

assessment of the properties broad parameters against needs
It is only after that the section 32 becomes important or is useful.
What would be the benefits for buyers of requiring information disclosure when a property is
being marketed for sale?
Whilst the early provision of the disclosure statement will not harm the process we do not see any
marginal benefit which will outweigh the cost, both real and potential, to vendors and purchasers ..
Could vendor statements be provided in alternative forms (e.g. web accessible)?
Yes. Allowing the provision of the vendor’s statement in alternative forms especially web accessible - is
very important. This should not, however, lead to the statement being no longer required to be part of the
contract.
Does the vendor statement impose any delay to the completion of the purchase transaction, and if
yes, how long are such delays and who is impacted by the delay?
It can lead to a delay, simply because the statement is required to be annexed to the contract and a
contract cannot be signed until it is provided.
The completion of a statement is dependent on a range of third parties providing information. The REIV is
not able to quantify this as we lack data on the incidence of the delays.
5 – A closer look at current disclosure requirements
5.1 Disclosure of financial information
Is any of the financial information required to be disclosed by a vendor easily obtainable by a
potential purchaser?
No. Privacy issues understandably make this information hard to access without disclosure being
required.
Is this level of information required under section 32(2)(a) appropriate?
Yes.
Are there alternatives for disclosing this information?
No, the current manner of disclosure appears to be the most direct and efficient.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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Rates, taxes and charges
Is the information required under section 32(2)(d) useful to potential purchasers?
Yes. It helps them to understand the broader costs of ownership. The fact it is ‘static’ and only refers a
point in time does, however, give the information a limited lifespan.
What are the benefits for purchasers if the vendor provides a statement attesting that the level of
financial outgoings affecting the land does not exceed a particular amount?
Whilst this would have no greater benefit to the purchaser than specifying the amount, it can give the
information a greater lifespan and in a small way reduce the cost to the vendor.
Insurance policies
Is it general practice for the vendor to retain the risk of loss or damage to the property prior to
settlement?
Yes. Financial institutions, however, often also require purchasers to effect insurance cover, resulting in
two policies being in place, albeit for differing insurable interests.
Is the standard form contract commonly used for the sale of land?
Yes. The form of contract prescribed under the Estate Agents (Contract) Regulations is in common use. It
also forms the basis of – or is partly incorporated into – more specialized forms of contract used for offthe-plan sales.
Additional financial disclosure for terms contracts
Are terms contracts commonly offered?
In the experience of REIV Members terms contracts are not commonly offered.
What is the value of disclosing this information as part of the vendor statement?
In light of the non-standard nature of this form of finance it is important than the financial commitment
being undertaken by a terms purchaser is made transparent.
5.2 Land use disclosure
Easements, covenants and restrictions affecting the land
Planning controls
Is there still a need for vendors to disclose planning and land use information?
Yes.
Are the issues that led to the expansion of land use disclosure in 1989 still relevant today?
Yes, they are still relevant.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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Should a failure to disclose certain planning details that may be readily available provide a
purchaser with rights to rescind the contract?
Yes. The point of disclosure is to ensure the purchaser is informed.
Are there circumstances in which vendors need to inform prospective purchasers when a nonmetropolitan planning scheme prohibits the construction of a dwelling house?
Yes. The underlying assumption of most buyers is that they can construct a home on land so it is prudent
to inform them if they cannot. This is particularly the case when a property is located in a catchment area
or in a rural zone.
Do these existing requirements cover all the relevant information that should be disclosed?
Yes.
5.3 Notices, orders, declarations, reports and recommendations
Is section 32(2)(e) too general in its application?
Yes. The section lacks clarity. It lacks clarity because it relies upon value judgments and assumptions
about what a vendor may or may not know. The result is that it can undermine the effectiveness of the
overall statement.
What is the phrase ‘affecting the land’ taken to mean in practice? Should this be stronger and
related to land use or title?
This phrase is vague, lacks definition and as a result it is unclear to all parties. It should be revised so that
at a minimum it applies to matters of which the vendor has an actual knowledge of through receipt of a
notice or order.
Can vendors be reasonably expected to have knowledge of reports and recommendations?
No. This is especially the case for studies, projects and planning amendments that are general in nature.
Should the test be stronger and relate to notices, orders and declarations of which the vendor has
notice or has been served?
Yes. The section should be revised so that at a minimum it applies to matters of which the vendor has an
actual knowledge of through receipt of a notice or order.
Land acquisition
A purchaser can rescind any contract for land that is subject to compulsory acquisition – should
this continue?
Yes.
Given the strong rescission rights that apply irrespective of whether there has been disclosure, is
there a need to disclose the notice under section 6?
Yes.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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Agricultural and veterinary chemicals contamination
Is such specific disclosure of contaminated agricultural land still required?
Yes.
Are these notices easy for a potential purchaser to obtain?
Yes.
Could land use restriction notices form part of a general disclosure of notices affecting the land?
Yes.
5.4 Warnings to prospective purchasers
Given that these warnings do not disclose information specific to title:
-
is the vendor statement an appropriate place for the placement of these warnings?
No. The various warnings should be grouped together in the contract of sale.
-
should these warnings form part of the contract of sale?
Yes.
should the absence of one of these warnings from a vendor statement lead to rights of
rescission?
No. That is too onerous an outcome given the nature of the warnings. The warnings are generally nonspecific in nature as they do not require the vendor to actually disclose anything. Allowing rescission for
what amounts to a drafting error undermines the other rights of rescission.
The Parliament has clearly already made this judgment in the most recent changes to the Sale of Land
Act in which the lack of a warning for off the plan sales did not invalidate the sale. That judgment should
be applied more widely.
Are these warnings effective in raising awareness in potential purchasers about issues they
should be considering before purchasing land in a particular area?
Yes. However only to the extent that they read the statement, which is not always the case.
Are there other ways in which a potential purchaser could be warned to make their own enquiries
before purchasing a property?
The current regime is the most effective, in the Institute’s view. Creating more and additional warnings will
only undermine the role of the contract and statement.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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Planning and building controls warning
Are inquiries commonly undertaken by potential purchasers about land use controls that apply to
a particular property?
Yes. This is especially the case in that since the disclosure was made a requirement. It is even more the
case since the availability of information about land use controls has become far more accessible through
the internet.[?]
Is this warning necessary or do requirements to disclose planning information specific to the
property provide sufficient disclosure?
The current requirements are sufficient.
Commercial agricultural production activities warning
Is this warning effective?
Yes.
Do potential purchasers of agricultural land commonly undertake investigations of the nearby
agricultural practices and processes when deciding whether to buy a particular property?
Yes. However, only to the extent that they read the statement, which is not always the case.
Are there alternative options for increasing awareness in potential purchasers of agricultural land
of the amenity and other impacts from commercial agriculture?
The current regime is the most effective in the Institute’s view. Creating more and additional warnings will
only undermine the role of the contract and statement.
Growth areas infrastructure contribution warning
Should this warning be limited to land being sold in the UGB only?
Yes.
Are potential purchasers buying in the UGB aware that a GAIC may be levied?
Yes.
Do potential purchasers regularly obtain advice about GAIC liability before purchasing land?
The REIV is unable to comment as we lack specific information.
5.5 Other GAIC disclosure - work-in-kind agreements
The REIV is unable to comment as we lack specific information.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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5.6 Essential services
Is this information easily obtainable by potential purchasers through other means?
This information is not easily accessible and there is value in it being clearly disclosed. A lack of service
connections can have a definite impact on the value of the land to a potential purchaser.
Should disclosure about essential services be limited to services that are not connected to the
land?
No. The cost of establishing essential service connections is often very high which makes their disclosure
important.
Is the warning effective in prompting potential purchasers to seek out further information about
the cost and availability of unconnected essential services?
Yes.
5.7 Road access
Is road access an issue that still requires a level of mandatory disclosure?
It is when there is a lack of direct access. Given the impact on the value and use of the land it should be
disclosed.
Are there ways for potential purchasers to view blocks of land (e.g. satellite imagery, maps and
terrain) without the need for specific disclosure?
The improved access to satellite imagery is of immense benefit to potential purchasers but given it is
provided by third parties and is not necessarily regularly updated it cannot be relied upon for the vendors
statement.
Should this requirement be limited to rural areas only?
No. Properties without direct road access may be comparatively rare but do exist in the metropolitan area.
5.8 Additional matters to be disclosed for land with a residence
Particulars of building permits
Should vendors disclose the particulars of building approvals and permits?
Yes.
Are there alternative ways to access this information?
There may be in the future. At present this is the most effective and efficient mechanism to create
disclosure.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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What benefits do purchasers receive from the current level of disclosure?
The existence or otherwise of relevant permits can have a fundamental impact on the value of the
property and as such are worthy of disclosure.
Do these requirements duplicate requirements under the Building Act and the House Contracts
Guarantee Act to provide certain information to potential purchasers prior to sale?
No.
Given that the House Contracts Guarantee Act and the Building Act provide purchasers with the
option to void a contract of sale, is there a need for separate rescission rights to attach to nondisclosure of particulars of guarantees and insurance?
Yes. The existence or otherwise of relevant permits can have a fundamental impact on the value of the
property and as such are worthy of disclosure and in the event of non-disclosure the option of rescission
should be available.
6. Certificates and documents
Does the supply of these certificates afford particular benefits to potential purchasers and costs
to vendors and their representatives?
Access to this information is important for potential purchasers.
Are any of these certificates and documents easily obtainable by a prospective purchaser, and
what are the cost implications for the purchaser?
Not in all cases.
Do any of these documents duplicate other information required in the vendor statement?
Yes.
Do potential purchasers benefit from receiving additional owners corporation documents such as
a copy of the rules, and recent resolutions in addition to the owners corporation certificate?
Yes.
Do conveyancers or solicitors acting for potential purchasers tend to obtain separate copies of
these certificates or do they rely solely on certificates supplied by the vendor?
The REIV understands that obtaining separate certificates is a common occurrence.
Would there be benefit in directing potential purchasers to websites where some of these
certificates could be viewed online?
Yes, that would benefit purchasers.
REIV Response to the review of section 32 of the Sale of Land Act 1962
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What are the likely cost implications for purchasers if vendors were no longer required to disclose
certificates under section 32 (i.e. would this result in the costs being transferred from the vendor
to the purchaser)?
Yes, it would transfer the burden to the purchaser.
Is section 32(4) relied upon often in the preparation of vendor statements?
Yes.
Would there be benefit in extending the operation of section 32(4) to other matters required for a
vendor statement?
It is not possible to answer this, without knowing the nature of the other matters.
7. Rights of rescission
The right of rescission is, in general a worthwhile tool because it ensures compliance, on the specific
questions in this section the REIV is however unable to answer.
8. Alternative approaches
Do you have any views on alternative approaches that could be used to improve the effectiveness
of vendor disclosure while reducing the costs to vendors?
The REIV has a number of overarching suggestions that could improve the effectiveness of the vendors
statement:

continue to ensure the vendors statements are not used to require disclosure of matters that are
unclear or not directly related to physical aspects of the property;

remove the lack of clarity in S32(2)(e) concerning ‘Notices, orders, declarations, reports and
recommendations’ so that vendors are only required to disclose matters of which they have been
directly advised of;

allow the disclosure to be provided in an electronic manner;

update the language of the act and ensure it is gender neutral;

clarify that statements provided to potential purchasers need not be individually signed by the vendor;

require authorities to issue forms in plain English;

introduce an expiry date for vendor statements;

introduce standard fees for all municipal certificates;

require agencies, municipalities and owners corporations who issue certificates to do so in a maximum
time with penalties for failure to do so; and

undertake a review owners corporations fees with the aim of lowering the fee when multiple
certificates are required.
REIV Response to the review of section 32 of the Sale of Land Act 1962
PAGE 13