Important Information about Section 32 Document in Real Estate Transactions

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CONVEYANCING
ANSWER – 2
The Section 32 is actually a document which is required to be provided by seller of the
real estate, known as the vendor, to the intending purchaser, termed as the buyer. This
document can only be signed by the vendor. It is known by this name because it is based
on Section 32 of the Sale of Land Act, 1962 and is essentially required as it contains
certain important information about the real estate which the vendor must provide to the
intending purchaser BEFORE signing of the contract of sale takes place1.
(a) Apart from the relevant details about the real estate, Section 32 document must
also reveal information regarding taxes, rates, charges and outgoings, which the
intending purchaser would be liable to pay after the sale is finalised. If the
parties agree, then the vendor can also submit the total amount of taxes, rates,
charges and any outgoings in a statement which would state that these expenses,
including any outstanding interest, do not exceed the specific sum declared in
the statement2.
(b) If the details are not registered on Title, then the vendor can disclose the details
of any mortgage, whether it is registered or not, or any receipt of rents and
profits, in Section 32 document as required under s 32(2)(a). This disclosure will
contain all mortgage which have not been discharged or declared by the vendor
till the time the buyer takes entitlement of possessing the land.
ANSWER – 6(a)
It is the duty of the vendor’s Conveyancer or Lawyer to provide an adjusted statement
of account to the buyer, regarding the current Council and Water Rates, as well as any
allowances, which are required to be paid by the vendor when the settlement falls due.
1 S. Hepburn, Australian Principles of Property Law, (Routledge, Newport, NSW, 2013).
2 M. Yardney, What Every Property Investor Needs To Know About Finance, Tax and the Law. (3rd ed),
(Wilkinson Publishing, Melbourne, VIC, 2016).

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An analysis of how such adjustments have to be declared by the vendor is given below.
The example clearly shows how the due amounts are required to be paid by the buyer
and the vendor. The final statement needs to state the amounts separately under two
columns Payable by Buyer and Payable by Vendor.
Council Rates3 are to be paid annually, from 1 July to 30 June every year, whereas
Water Rates are payable on quarterly basis, which are:
o 1 July to 30 September
o 1 October to 31 December
o 1 January to 31 March
o 1 April to 30 June
Distributing Water Usage
Considering that the vendor sells the property vide a contract signed on 22 September
and the dues of Melbourne Water for the quarter ended 30 September are required to be
paid by 15 October. The bifurcated statement to be provided by the vendor’s
Conveyancer of Lawyer will show that the vendor’s usage of water, till the time he
owned the property, is from 1 July to 22 September when the quarterly bill is issued to
the buyer and the buyer is liable to pay for usage from 22 to 30 September only. The
Conveyancer or Lawyer will issue a certificate providing the buyer details about:
1. Date on which the meter was last read.
2. Vendor’s daily average in kiloliters.
3. Dollar charges per kiloliter being charged by Melbourne Water.
On the basis of the statement and certificate, the buyer cannot be charged for any
previous dues and Melbourne Water will have to find the vendor to recover its
outstanding dues.
ANSWER – 8
At the time of executing the Loan Documents, Eastpac Bank (the lending institution)
would have specified the mode of recovery in case of default by Isabelle (the
borrower). Regardless of the approach chosen by Eastpac Bank, Isabelle has the option
3 D.F. Hinkel, Practical Real Estate Law. (7th ed). (Cengage Learning, Stanford, CT, 2014).

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of getting legal and tax opinion from an expert before accepting the decision between
short sale or a foreclosure4.
Short Sale
Advantages to Isabelle for accepting a short sale:
o Isabelle is in control of the sale, not Eastpac Bank.
o Isabelle can make a choice about who will be the buyer.
o Foreclosure will always carry a social stigma for Isabelle.
o Isabelle can stay current on payments while applying for a short sale.
o Legally, the sale will be considered as a regular sale.
Foreclosure
Isabelle has following advantages when choosing a foreclosure:
o It is an instant solution.
o She can immediately stop making payments.
o She can file suit against Eastpac Bank for refusing loan modification.
o Once foreclosure is notified, Isabelle will not be responsible for any damages to
the property.
o Isabelle can just leave the property and walk away5.
In case of a short sale because of extenuating circumstances, Isabelle can re-apply for a
mortgage after two years of default by explaining the circumstances with appropriate
documentation. Isabelle can lose as many as 70-100 points on credit score. In case of a
foreclosure due to extenuating circumstances, she can become eligible for a mortgage
after three years of default. Isabelle may lose 200-300 points on credit score.
For Eastpac Bank, the Foreclosure is more cumbersome in the long run as Isabelle can
take legal action and moreover Eastpac Bank stops receiving payments till the suit is
resolved. Whereas in Short Sale, Eastpac Bank cannot be sued, it does not lose any
money because of delay in payments and can bargain with Isabelle for the best
settlement6.
4 M. Yardney & T. Corley, Rich Habits Poor Habits: Discover why the rich keep getting richer and how
you can join their ranks, (Wilkinson Publishing, Melbourne, VIC, 2016).
5 M. Yardney & T. Corley, Rich Habits Poor Habits: Discover why the rich keep getting richer and how
you can join their ranks, (Wilkinson Publishing, Melbourne, VIC, 2016).
6 Ibp Inc, Australia Company Laws and Regulations Handbook, Volume 1. (Int'l Business Publications
Washington DC, 2009).