A Section 32 statement, commonly known as a Vendor Statement, is the primary disclosure document in a Victorian property transaction. For a developer or investor looking to subdivide a backyard in suburbs like Reservoir or Mount Waverley, this document should provide a clear picture of the land. However, the legal requirements for what a vendor must disclose are specific and limited. Understanding property law in Victoria means knowing that the absence of a document is often more telling than the documents provided.
The Sale of Land Act 1962 mandates that a vendor must provide certain information to a buyer before a contract is signed. If they fail to do so, or provide incorrect information, a buyer may have a right to rescind the contract before settlement. The risk of rescission is a serious matter for any project, as even minor technical errors in disclosure can allow a purchaser to walk away from the deal entirely. For a developer, a rescission is a disaster that wastes months of planning and thousands in holding costs.
The trap of missing building permits
A common issue we see in Melbourne involves illegal building works. The law requires a vendor to disclose building permits granted in the preceding seven years. It does not require them to disclose works that were finished without a permit. If you are buying a property with a recently converted garage or a large rear deck, and the Vendor Statement contains no building permits, you should be concerned. These illegal structures can interfere with your planned building envelopes or require expensive rectification before the council will issue a planning permit for your subdivision. This can add significant costs to your budget and months to your project timeline.
When you prepare to subdivide, your surveyor will need to map existing structures. If those structures were built illegally over an easement, the council or water authority may demand their removal. The Vendor Statement might state that there are no "notices, orders, declarations, reports or recommendations" from public authorities. This statement is often true only because the council has not yet discovered the illegal work. Once you lodge a planning permit application, the council will look closely at the site. This is when the "invisible" problems become visible and expensive.
Title restrictions and the subdivision process
Common hurdles for any developer are Title restrictions. These are often buried in the fine print of the Register Search Statement or the attached instruments. A restrictive covenant might state that only one dwelling can exist on the lot. If you miss this, you might buy a property intending to build three townhouses only to find the law forbids it. Some of these restrictions date back to the early 20th century and use archaic language.
We often deal with cases where vague restrictive covenants appear on the title. While some can be removed via the Supreme Court or a planning permit process, others are set in stone. If the Vendor Statement does not include the full copy of the covenant deed, you cannot know the extent of the restriction. Never rely on the summary provided in the Section 32. You must see the original instrument to understand who benefits from the restriction and what exactly is prohibited.
Missing Section 173 Agreements
Under the Planning and Environment Act 1987, a council can enter into a contract with a landowner known as a Section 173 Agreement. These agreements are registered on the title and bind all future owners. They are frequently used in Melbourne to manage how land is developed. A Section 173 Agreement might prevent you from ever subdividing the land, or it might require you to pay significant developer contributions when you do. If the Vendor Statement shows a Section 173 Agreement exists but does not include the full document, you are flying blind. These agreements can contain obligations to maintain specific vegetation or use certain building materials that could make your project financially unviable. It is crucial to review the specific terms of the agreement before proceeding.
Developers should also be aware of how government infrastructure projects impact land. While not always in a standard Section 32, large-scale projects can lead to future acquisitions. You can identify these by checking the Planning Scheme for Public Acquisition Overlays or via Victoria's Big Build, which often signal future infrastructure corridors. If your land is in the path of a new road or rail link, your subdivision plans will likely be rejected by the council.
Easements and the "Silence" of the Vendor Statement
Easements are a standard part of Victorian property. Most blocks have a sewerage or drainage easement along the back or side boundary. The Vendor Statement will include a plan of subdivision showing these. What it will not show is the condition of the pipes underground or whether the current owner has built over them without a "Point of Connection" report or a "Build Over Easement" consent from the water authority.
When we work with surveyors to lodge a plan of subdivision via the SPEAR system, the first thing authorities check is the protection of their assets. If the Vendor Statement is silent on build-over consents for that existing shed or pool house, you might be responsible for moving those structures at your own cost. This is a common delay in getting titles registered. We recommend asking for these consents during the due diligence period, rather than waiting for the council to flag them during the planning permit stage.
Owners Corporations and hidden costs
If you are buying a property that is already part of a subdivision, there may be an Owners Corporation (OC). The Vendor Statement must include an Owners Corporation certificate and copies of resolutions from the last annual general meeting. Small developers often overlook these records. These documents can reveal planned "special levies" for major repairs or ongoing legal disputes between neighbours. If you plan to further subdivide a lot that is already part of an OC, you will need the consent of the other members. If the meeting records show a history of hostility toward development, your project will face significant hurdles.
The requirements for disclosure in Victoria are specific to our local laws. In Victoria, the onus is heavily on the buyer to investigate the physical state of the land and the planning possibilities. The Vendor Statement is merely a starting point, not a complete history of the property.
How to protect your subdivision project
To avoid delays in getting your titles registered, you must look beyond the provided documents. We work with your town planner and surveyor to cross-reference the Vendor Statement with current council records.
The Subdivision Act 1988 governs how land is carved up in Victoria. It is a technical piece of legislation that requires precise legal and surveying work. If the initial Vendor Statement is flawed and you rely on it without verification, your application under the Subdivision Act will likely stall. We focus on identifying these "invisible" issues early so that your contract of sale can be negotiated with the right protections in place.
This information is general in nature. Contact us for advice specific to your project.
