Anyone who sells land in Victoria must disclose certain information to the purchaser. They do this by providing a disclosure statement. This is commonly called a “vendor’s statement”. Importantly, the vendor must provide it before the purchaser signs the contract of sale.
In October 2014, significant changes came into effect. These changes updated what vendors must disclose in the vendor’s statement.
As a result, vendors, purchasers, and real estate agents must understand the updated requirements. They must also ensure the disclosure documents comply with legal obligations.
Why is a vendor’s statement required?
A vendor’s statement provides information that a simple inspection cannot reveal.
In many cases, the vendor knows details that the purchaser cannot easily discover. Even with due diligence, this information gap still exists. As a result, buyers may struggle to assess the property properly or set a fair price.
Therefore, the vendor’s statement improves transparency. In addition, it helps purchasers make informed decisions and negotiate more effectively.
What changes have been made to vendor’s statements?
The law introduced several key changes, including:
- A new due diligence checklist from Consumer Affairs Victoria, which must be provided to purchasers
- Updated terminology and removal of some older provisions
- New disclosure requirements for vendors
- A change in service disclosure rules, where only unconnected services must be disclosed
Preparation of the Vendor’s Statement
A vendor’s statement is a legal document. Therefore, it must be accurate and complete. If it contains errors or missing information, the purchaser may withdraw or take legal action.
For this reason, a qualified lawyer should prepare the vendor’s statement. This helps ensure all required disclosures are included.
In addition, purchasers should always have the document reviewed by their own lawyer before signing.
Offences
It is an offence for a vendor to provide false or misleading information. It is also an offence to omit required details, whether done knowingly or recklessly.
Furthermore, the law now imposes stricter penalties for non-compliance.
In addition, vendors must give the signed vendor’s statement before the contract is signed. Failure to do so is also an offence.
If a vendor breaches these rules, the purchaser may cancel the contract. This applies where the contract relies on incorrect or incomplete disclosure.
Therefore, vendors must ensure full and accurate disclosure to avoid serious consequences.
Due Diligence Checklist
Consumer Affairs Victoria has created a checklist to help buyers identify risks and obligations affecting a property.
In particular, it highlights issues that may not be obvious during inspection.
The checklist includes considerations such as:
- Urban living conditions
- Owners corporation obligations
- Growth area restrictions
- Flood and fire risk
- Rural property issues
- Mining or earth resource activity
- Soil and groundwater contamination
- Land boundaries
- Planning controls and zoning
- Planning permits
- Safety issues
- Building permits
- Aboriginal cultural heritage considerations
- Insurance for recent building work
- Service connections (water, gas, electricity, internet)
The checklist must be available when the property is first advertised for sale.
If an estate agent is involved, they must provide the checklist. Otherwise, the vendor must supply it directly.
Does the checklist cover everything?
The checklist is only a starting point. Therefore, buyers should still make further enquiries before purchasing.
For example, the vendor’s statement does not include:
- Building condition reports
- Compliance with building regulations
- Accuracy of title measurements
Accordingly, buyers should seek legal advice if they are unsure about any aspect of the purchase.
If you are buying or selling property, or you need more information about vendor’s statements, contact us on (03) 9422 5439 or email [email protected].