The Section 32 exists because Victorian law makes the vendor disclose specific information before you sign. When that disclosure is defective, section 32K of the Sale of Land Act 1962(Vic) can give the purchaser a serious remedy: rescission of the contract, with the deposit returned. In practice the right is narrower and more conditional than buyers tend to assume, and vendors have a statutory defence that regularly succeeds. Below: what makes a Section 32 defective in the eyes of the Act, when you can and can’t pull out, and what to do if you’ve found a problem after signing.
What the vendor must disclose
Sections 32A–32I of the Act prescribe the required contents. The recurring categories:
- Financial matters, including rates, taxes, charges and other outgoings, and any charge over the land
- Insurance details where the contract doesn’t leave the land at the vendor’s risk until settlement, and owner-builder domestic building insurance where recent owner-builder works exist
- Land use: easements, covenants and similar restrictions, the planning scheme and zone, and whether the land is in a designated bushfire-prone area
- Government notices, orders and proposals directly affecting the land, such as compulsory acquisition, road proposals or contamination notices
- Building permits issued in the preceding seven years
- The owners corporation certificate and accompanying documents, for lots in an OC
- Growth Areas Infrastructure Contribution (GAIC) status where applicable
- Which of electricity, gas, water, sewerage and telephone are not connected
- Title: evidence of the vendor’s right to sell, the register search and plan
What counts as “defective”
Three broad failure modes engage section 32K:
- False information. The statement says something untrue. Rates understated, a covenant described incorrectly, owner-builder works not disclosed.
- Missing required information. A prescribed disclosure is absent entirely: no OC certificate for an OC lot, building permits from the last seven years left out, a bushfire-prone-area declaration nobody completed.
- Statement not given, or given too late. The Section 32 must be given to the purchaser before they sign. A statement handed over after signing does not comply.
Not every error qualifies in practice, because of the defence described below. A typo in a lot number that misled nobody gets treated very differently from an undisclosed demolition order.
The rescission right, and its two limits
Under section 32K, a purchaser who received a defective statement may rescind the contract at any time up until they accept title and become entitled to possession or rents. In practical terms, the window closes at settlement. Once you have settled, the section 32K right is gone, and whatever remedies remain sit in general contract and consumer law, which is much harder ground.
The second limit is the vendor’s defence. The contract survives, despite the defect, if the vendor satisfies the court on both of the following:
- the vendor acted honestly and reasonably and ought fairly to be excused for the contravention; and
- the purchaser is substantially in as good a position as if the disclosure had fully complied.
This is why minor or technical defects rarely support rescission. A missing certificate the purchaser never relied on, or an error that caused no loss and was corrected promptly, will usually fall within the defence. An omission that goes to the heart of the purchase is another matter. An undisclosed Section 173 Agreement that prevents the development you bought the land for is the kind of defect the section exists for.
Vendor penalties
Separately from rescission, section 32L makes it a criminal offence for a vendor to knowingly or recklessly provide false information in a Section 32, or to fail to provide information it must contain. For buyers this matters mostly as leverage. Once a genuine disclosure defect is identified and put to the vendor’s practitioner, it tends to get taken seriously.
If you’ve found a defect after signing
- Act before settlement. The window closes there. If you settle knowing of the defect, the section 32K remedy is lost.
- Get legal advice before doing anything. Whether a defect survives the honest-and-reasonable defence is a judgment call, and rescinding wrongly can put your own deposit at risk. Rescission is a formal step that has to be done correctly.
- Write down what you relied on. The “substantially as good a position” limb turns on what difference the missing or false information made to you. Evidence from the time, showing you would not have signed or would have paid less, strengthens your position considerably.
- Consider a commercial fix. Plenty of disclosure defects end in a price adjustment, vendor works or an extended settlement rather than a courtroom. The credible ability to rescind is what gets those conversations moving.
Before you sign: the cheaper version of this article
Everything above is more expensive and more stressful than catching the defect before signing. A pre-signing review that checks the required disclosures are present and consistent costs somewhere between $19 and a few hundred dollars, depending on how you do it. Arguing about the same defect through lawyers after settlement costs tens of thousands. If you’re reading this before exchange, go through the required contents listed above and treat any gap as a question the vendor answers before you sign, not after.
This article is general information about Victorian law, not legal advice. Rescission decisions are consequential and fact-specific. Engage a solicitor before acting.