In Victoria, every vendor of land is required to give a statement containing prescribed information, commonly known as a "vendor's statement", to the purchaser before the purchaser signs a contract for the sale of that land. The prescribed information is contained in s32 of the Sale of Land Act 1962.
The Sale of Land Amendment Act 2014 ("Amending Act") makes important changes to s32 which will come into operation on 1 October 2014.
Vendors and their real estate agents must be aware of the changes and ensure that documentation provided to purchasers satisfies the requirements of the Amending Act which are set out in a new Division 2 of Part II of the Sale of Land Act. This is because it is an offence for a vendor to knowingly or recklessly supply false information or fail to supply all of the information required to be given in a vendor's statement. This was an offence before the Amending Act was enacted but the penalty was previously a maximum of 50 penalty units. The penalty has increased to:
- 300 penalty units in the case of a body corporate; and
- 60 penalty units in any other case.
A penalty unit for the year commencing 1 July 2014 is $147.61.
The Amending Act also makes it a specific offence to fail to give a purchaser a vendor's statement signed by the vendor before the purchaser signs the contract of sale, although this was implicit in the existing offence of failing to supply all of the required information.
If the vendor commits any of these offences, the purchaser may rescind any contract of sale which has been entered into on the basis of the information contained in or attached to the vendor's statement at any time before the purchaser accepts title and becomes entitled to possession or to the receipt of rents and profits, unless the court excuses the vendor's contravention. This provision applied before the Amending Act. To avoid the risk of a purchaser's rescission, it is essential that vendor's statements should contain the information as revised by the Amending Act.
What changes have been made to vendor's statements?
The changes include the following:
- Certain consumer information and warnings in the form of important notices to purchasers have been removed and replaced by a new due diligence checklist which has been prepared by Consumer Affairs Victoria ("CAV").
- Disclosure has been grouped into themes.
- Redundant provisions have been removed and terminology has been updated.
- Some new disclosure requirements have been imposed, for example in relation to planning scheme overlays.
- Only services (ie gas, water, sewerage, telephone and electricity) that are not connected must be disclosed.
When will the changes take effect?
If a vendor's statement has been prepared and signed by the vendor before 1 October 2014, it can continue to be used provided that the land remains for sale. In this case, the old form of vendor's statement can continue to be used even if it has to be amended or updated. However, an entirely new vendor's statement is required if the property is withdrawn from sale and put back on the market or where the vendor's statement is prepared and signed by the vendor after 1 October 2014.
Therefore, vendors must ensure that, if a property is withdrawn from sale, they or the real estate agent arrange for preparation of a new format vendor's statement before it is put back on the market.
If the property being sold is either vacant residential land or land on which there is a residence, the new due diligence checklist must be made available to any prospective purchaser from the time the land is offered for sale. It is the estate agent's responsibility to provide the checklist if a licensed estate agent is acting for the vendor. Otherwise, the vendor is required to provide the checklist. Failure to provide the checklist or providing a checklist which is not in the form approved by the Director of CAV incurs a penalty of 60 penalty units.
The new checklist is expected to be on CAV's website from 1 October 2014 so that it can be provided to prospective purchasers from that date.