" Knowledge is Power "

A contract is a legally binding agreement between the purchaser and the vendor of a property that outlines the terms and conditions of the property transaction. By signing the contract, both the purchaser and the vendor agree to comply with the terms of the contract and will be responsible for any breach of its provisions.

Common details included in the contract are the particulars of both the purchaser and the vendor, the parties' agent and their respective legal representative, the description of the property along with any goods sold with it, the sale price and whether the property is sold with an existing tenant. 

The contract would also provide whether there are conditions for either party to satisfy (conditional contracts) or whether the contract is unconditional at the moment it is signed by both the purchaser and the vendor. Typical conditional contracts are when the contract is made subject to loan approval and/or pest and building inspection. 

Lastly, the contract would in addition to the above, contain the general conditions and special conditions which essentially are the rules of the transaction.

Section 32 on the other hand discloses details specifically about the property and it is by virtue of the law that a vendor is responsible to provide the purchaser with a Section 32 before the purchaser signs the contract.

A standard Section 32 would usually include the following information:

Title Search

A copy of the title of the property identifying the owner of the property, description of the property, registered restrictions and various other details.

Copy of Plan

A plan registered with the title's office containing the description of the property and can also include any description of restrictions registered on the plan of the property.

Details of Restrictions

This can be in the form of a covenant, caveat or other restrictions which can affect how the property can be used.

Details of Outgoings

Commonly would include the amount of council rates, water rates, land tax and owners corporation levies payable for the property.

Planning Certificate

Specifies the zone the property is located in (e.g. Residential Zone, Commercial Zone, Farming Zone or etc). Depending on the zone the property is located in, there may be restrictions on how the property can be used.

Roads Certificate

Discloses if there is any proposal for the government to acquire (purchase) part or whole of the property.

Bushfire Search

Identifies if the property is located in a bushfire zone. 

Building Works

The law requires a vendor to disclose any building permits obtained within the last 7 years.

Contamination

Reveals if the property is affected by contamination.

Services Connected

Sets out if any services (water, electricity, sewerage, gas and telephone) are connected to the property.

Apart from the contract and Section 32, there are other documents that can be provided along with it as part of the transaction:

Due Diligence Checklist

A useful checklist for a purchaser and it is recommended that all purchasers read the checklist as a form of general information.

Defects Inspection Report

An owner-builder must provide a defects inspection report for any works carried out within the past 6 years and 6 months.

Tenancy Agreement

This is usually attached to the contract if the property is sold with an existing tenant.

Deceased Estate

If a transaction involves a deceased estate, a copy of probate or letters of administration can be enclosed within the Section 32 to identify the person legally entitled to deal with the property.

Power of Attorney

The contract may be signed by a power of attorney and usually, a copy of the power of attorney document is provided with the contract and should be requested, if not already.

Whether you are a purchaser or vendor and no matter the size of the transaction, it is vital to always seek appropriate legal advice before signing any form of agreement, this includes the contract and Section 32.

At Cerulean Legal, we are equipped with the necessary skills and experience to review, negotiate and prepare contracts and Section 32 for property transactions.

This information is only provided as a guide and must not be treated as legal advice. Each contract, including Section 32 should be assessed on its individual basis and it is recommended that you seek suitable legal advice.