Understanding Vendor Statements and Contracts

Introduction

You've found a property and your offer has been accepted. Now you're waiting for the Contract of Sale and the Vendor Statement from the seller's real estate agent. Once you receive them, you'll forward everything to your conveyancer for review.

But here's what many first home buyers don't realize: what's in these documents can dramatically change your decision. Vendor statements can reveal major problems—planned renovations that will cost you thousands, special levies on apartments, council notices about building work—that completely change the property's value.

This guide explains what vendor statements are, what your conveyancer should check, what red flags look like, and how to use these documents to protect yourself. Note: Different states call these documents different names (Section 32 in Victoria, Form 1 in South Australia, etc.), but they serve the same purpose.

What Is a Vendor Statement?

The Basics

A vendor statement (called Section 32 in Victoria, Form 1 in South Australia) is a legal document provided by the property seller that discloses important information about the property.

Think of it as the seller's obligation to tell you what they know about the property—and more importantly, what problems they know about.

By State: What It's Called

• Victoria: Section 32 (Vendor's Statement)
• South Australia: Form 1 (Vendor's Statement)
• NSW: Disclosure requirements (seller's agent disclosure)
• Queensland: Seller's disclosure (REIQ contracts)
• WA/ACT/NT/TAS: Seller's disclosure or vendor statement

Regardless of name, they all serve the same purpose: seller disclosure.

Why It Matters

The vendor statement reveals information that won't show up in your building inspection or property photos:

• Planned maintenance or renovations
• Special levies (for apartments)
• Building or plumbing issues the seller knows about
• Council notices or orders affecting the property
• Building work done without permits
• Disputes with neighbors
• Flooding or water damage history

What Should Be in a Vendor Statement?

Standard Sections

A complete vendor statement typically includes:

1. Title Information

• Whether the property has a clear title (no liens or claims against it)
• Any easements or restrictions on the land
• Whether there are any mortgages or charges

2. Council and Planning Information

• Outstanding council notices
• Building permits or approvals
• Planning permits for any structures
• Zoning information
• Any council objections or enforcement actions

3. For Apartments/Units (Body Corporate Information)

• The body corporate scheme details
• Body corporate contact information
• Body corporate fee information
• Expected special levies or major works
• 10-year maintenance plan
• Financial statements
• Meeting minutes

4. Seller Disclosure

• Any building defects or problems the seller knows about
• Any damage history (water, flood, fire, structural)
• Neighborhood issues (noise, disputes)
• Utilities information
• Any uncompleted building work

5. Services and Utilities

• Water supply and sewerage information
• Whether any services are shared
• Any ongoing maintenance or contracts

When Should You Get the Vendor Statement?

Ideally: Before You Make an Offer

Best practice is to have a vendor statement reviewed by your conveyancer BEFORE you make an offer. This gives you:

• Complete information for your decision
• Ability to walk away without losing money
• Knowledge to inform your offer price
• Leverage to negotiate if issues arise

However, this isn't always possible. In fast-moving markets, sellers may not have vendor statements ready before accepting offers.

Realistically: Immediately After Offer Accepted

Once your offer is accepted, the seller should provide the Contract of Sale and Vendor Statement within a few business days.

State Variations on Timing:

• Victoria: Usually 7-10 days
• South Australia: Usually 3-5 days
• NSW/QLD: Typically included with contract
• Others: Usually within a week

Red Flag: Long Delays

If the seller is taking more than a week to provide the contract and vendor statement, this is a red flag. Why?

• It suggests disorganization or lack of preparation
• It eats into your cooling-off period
• It might indicate they're hiding something

What Your Conveyancer Should Check

1. Title Search Results

Your conveyancer will conduct a title search to verify:

• The seller actually owns the property
• There are no liens or claims against it
• Ownership is clear to transfer to you
• Any easements or restrictions are acceptable

What to watch for:

• Multiple owners (inheritance issues?)
• Recent changes of ownership (property flipping?)
• Liens or mortgages (must be cleared at settlement)
• Unusual easements or restrictions

2. Council Notices and Orders

Your conveyancer will check for:

• Outstanding building permits or code violations
• Water and sewerage notices
• Planning permits or development notices
• Any council enforcement actions

What to watch for:

• Outstanding work orders (must be completed before settlement)
• Unpaid council fines
• Building work without permits
• Zoning violations

Example: A council notice about a fence built without a permit might require removal before you take ownership.

3. For Units/Apartments: Body Corporate Information

If you're buying an apartment or unit, your conveyancer should thoroughly review:

• The body corporate scheme documents
• The 10-year maintenance plan (critical!)
• Financial statements of the body corporate
• Any planned special levies
• Whether major works are scheduled

What to watch for:

• Major works planned (roof replacement, façade work)
• Special levies being voted on
• Financial stress in the body corporate
• Poor maintenance history
• Disputes between owners or with the body corporate

Example: If the body corporate has flagged $50,000 in special levies for facade work, this significantly impacts your costs. You need to know this before settlement.

4. Vendor Statement Disclosures

Your conveyancer will carefully review what the seller has disclosed:

• Building defects or issues
• Water damage or flood history
• Structural problems
• Major repairs needed
• Any disputed boundary matters

What to watch for:

• Vague or incomplete answers
• Any mention of "works required"
• Multiple past attempts at repairs (suggests ongoing problems)
• Disclosed defects that seem serious

5. Building or Plumbing Issues

The vendor statement should disclose any known building or plumbing problems. Your conveyancer should flag:

• Asbestos (in older properties)
• Subsidence or foundation issues
• Roof problems or leaks
• Faulty plumbing or blocked drains
• Damp or moisture issues

Critical Issues: What Conveyancers Look For

Issue #1: Building Work Without Permits

The problem: Someone added a second story, extended the garage, or renovated without getting council approval.

Why it matters:

• The work is technically illegal
• You might be ordered to remove it
• It could affect insurance
• It impacts resale value

What your conveyancer does: Checks council records for permits. If work is found without permits, they flag it and you can:

• Negotiate a price reduction to cover legalization costs
• Ask the seller to obtain retroactive approval
• Withdraw from the purchase

Issue #2: Special Levies on Apartments

The problem: The body corporate has voted to spend $100,000 on facade work. Each owner must pay their share.

Why it matters:

• This is a real cost you must pay soon after purchase
• It significantly impacts your budget
• It's a surprise if you don't know about it

What your conveyancer does: Reviews body corporate meeting minutes and financial records to identify any planned special levies. You should:

• Factor this into your purchase price negotiations
• Ensure you can afford it
• Get a detailed explanation of what the work involves

Issue #3: Subsidence or Structural Issues

The problem: The property is on clay soil that's prone to subsidence, or there are visible cracks indicating structural movement.

Why it matters:

• Major repairs are expensive
• It affects insurance and mortgageability
• It's a serious safety issue

What your conveyancer does: Reviews the vendor statement for any disclosed damage or ongoing issues. Your building inspector should also look for this, but the vendor statement tells you if the seller knows about it.

Issue #4: Undisclosed Building Work or Repairs

The problem: The roof was replaced 5 years ago (normal), or the foundation was injected (concerning) but the seller didn't mention it.

Why it matters:

• Multiple repairs suggest an underlying problem
• You need to understand what's been fixed and why
• Repairs suggest future issues might arise

What your conveyancer does: Checks council records and building permits for work history. If work is found that wasn't disclosed, this is a potential problem.

Issue #5: Water Damage or Flooding History

The problem: The property suffered water damage from flooding or has had persistent moisture issues.

Why it matters:

• Water damage is expensive to remediate
• It can lead to mold and health issues
• It may affect insurance
• It suggests ongoing risk

What your conveyancer does: Reviews the vendor statement disclosure and may recommend you get a pest inspector to check for termite damage (often associated with water damage).

Red Flags in Vendor Statements

Red Flag #1: Vague or Incomplete Answers

If the vendor statement contains answers like "not aware" or "unable to provide" for important questions, this is concerning. Why doesn't the seller know about major issues affecting their property?

What to do: Ask your conveyancer to request clarification. The seller might be trying to avoid liability.

Red Flag #2: Multiple Repairs or Ongoing Issues

If the vendor statement mentions multiple past repairs to the same system (e.g., "plumbing was repaired 3 times in past 5 years"), this suggests an underlying problem.

What to do: Ask for specifics about what was repaired and why. Consider additional professional assessment.

Red Flag #3: Pending Major Works

If the vendor statement discloses major work needed (roof replacement, structural repair, facade work), you need to:

• Get quotes for the cost
• Negotiate a price reduction
• Ensure you can afford it post-purchase

What to do: Don't proceed without understanding the full scope and cost.

Red Flag #4: Unusual Easements or Restrictions

Some properties have easements that allow utility companies, neighbors, or councils to access parts of the property. Unusual restrictions might:

• Prevent you from building or renovating
• Allow neighbors access across your land
• Limit what you can do with the property

What to do: Ask your conveyancer to explain any unusual easements and what they mean for your use of the property.

Red Flag #5: Building Work Done Without Permits

If you discover (through your conveyancer's checks) that major work was done without permits, this is serious.

What to do: Negotiate with the seller to either:

• Obtain retroactive approval and permits
• Provide a significant price reduction to cover legalization costs
• Withdraw from the purchase

State-Specific Vendor Statement Details

New South Wales

• Name: Seller's disclosure
• Timing: Usually with contract
• Key focus: Check for undisclosed building work
• Body corporate: For units, check financial statements carefully

Victoria

• Name: Section 32 Vendor Statement
• Timing: Can be obtained before offer
• Key focus: Must carefully review all disclosures
• Body corporate: For units, very thorough review required
• Body corporate fee budget: Check for accurate disclosure

Queensland

• Name: Usually part of REIQ contract
• Timing: With contract of sale
• Key focus: Check REIQ disclosure sections
• Body corporate: Review body corporate documents thoroughly
• Building and pest clause: Typically included in standard contracts

Western Australia

• Name: Seller's disclosure
• Timing: With contract
• Key focus: Limited regulation—must do thorough checks
• Body corporate: For units, very limited regulation of body corporate
• Professional advisor: Critical to review carefully

South Australia

• Name: Form 1 Vendor Statement
• Timing: By law must be provided
• Cooling-off dependent on receipt: Your cooling-off clock often starts when you receive Form 1
• Body corporate: For units, check carefully
• Key consideration: Form 1 timing affects your cooling-off period

Australian Capital Territory

• Name: Vendor statement
• Timing: Usually with contract
• Key focus: ACT-specific disclosure requirements
• Professional advisor: Conveyancer should understand ACT requirements

Northern Territory

• Name: Seller's disclosure
• Timing: With contract
• Key focus: Limited regulation—thorough checks essential
• Termite disclosure: Important in tropical climate
• Professional advisor: Critical given limited regulation

Tasmania

• Name: Seller's disclosure
• Timing: Ideally before offer (no cooling-off)
• Key focus: Must be thorough since no statutory cooling-off period
• Pre-offer inspection: Essential without safety net
• Professional advisor: Conveyancer critical for protection

What to Do After Receiving Vendor Statement

Step 1: Forward to Your Conveyancer Immediately

Don't wait. Send the Contract of Sale and Vendor Statement to your conveyancer as soon as you receive them.

Step 2: Schedule a Review Meeting

Your conveyancer should review and contact you within 24-48 hours with initial findings. This should be a phone call or meeting, not just email.

Key questions to ask:

• Are there any major issues?
• Do any clauses concern you?
• Should we negotiate anything?
• What happens next?

Step 3: Arrange Building Inspection (if not already done)

Use the information from vendor statement to inform your building inspection. Tell the inspector:

• Any disclosed issues so they can pay special attention
• Any building work history
• Any water damage or structural concerns

Step 4: Review the 10-Year Maintenance Plan (for Apartments)

If buying an apartment, carefully review the 10-year plan. Ask:

• What major works are planned?
• When will they happen?
• What will they cost?
• How is it funded?

Step 5: Make Your Decision

Based on vendor statement review, building inspection, and conveyancer advice, you can:

• Proceed unconditionally
• Negotiate with the seller (price reduction, repairs, etc.)
• Exercise your cooling-off right

Special Focus: Apartments and Body Corporate

If you're buying an apartment or unit, the vendor statement includes body corporate information. This is critical to review:

Check the Financial Health

• Is the body corporate financially sound?
• Are there large reserves?
• Are body corporate fees reasonable?
• Is the body corporate involved in disputes?

Red flag: A body corporate with little reserve and no plan for future major works.

Review the 10-Year Plan

• What major works are budgeted?
• When will they occur?
• How much will they cost per owner?
• Is funding set aside?

Red flag: Major facade or roof work planned in the next 3 years with no special levy already voted on.

Check for Disputes

• Are there disputes between owners?
• Is there conflict with the body corporate?
• Have there been legal proceedings?

Red flag: Owners having to vote on whether to enforce by-laws suggests governance problems.

Verify Special Levies

If a special levy has been voted on, understand:

• What's the total cost?
• When will owners be billed?
• Can it be paid in installments?
• Is it a lump sum or ongoing?

Your Contract Review Checklist

After Receiving Contract and Vendor Statement:

• Forward to conveyancer immediately
• Schedule review meeting/call within 48 hours

After Conveyancer Review:

• Understand any major issues identified
• Know what needs negotiation
• Understand your rights and obligations
• Schedule building inspection

After Building Inspection:

• Compare findings with vendor statement disclosures
• Decide if issues warrant renegotiation
• If serious issues found, consider negotiating or cooling off

Before Signing Contract:

• Understand every clause you're signing
• Know your cooling-off rights
• Confirm you're comfortable proceeding

Key Takeaways

• Vendor statement is mandatory: Sellers must disclose key information
• Review before signing: Your conveyancer should review it
• Major works matter: Special levies significantly impact costs
• Building permits critical: Unpermitted work is a serious issue
• Body corporate information complex: Take time to understand it for apartments
• Ask questions: Don't assume things; clarify with your conveyancer
• Use it to negotiate: If issues disclosed, negotiate price or repairs
• Time is limited: You typically have 2-5 days (state dependent) to decide

The vendor statement and contract review are where your conveyancer earns their fee. Make sure you understand what they're telling you before you sign.

Next Steps

1. When your offer is accepted, request the Contract of Sale and Vendor Statement immediately
2. Forward them to your conveyancer within 24 hours
3. Schedule a meeting to discuss findings
4. If major issues identified, decide whether to negotiate, proceed, or cool off
5. Arrange building inspection to verify disclosed issues
6. Before signing, confirm you understand everything

Ready to move forward? Check our guide to choosing a conveyancer or understanding the building inspection process. Also review your cooling-off rights and the complete first home buyer checklist.