Section 32 Vendor Statement — Owner-Builder Disclosure
Mandatory disclosure requirements for vendors who have carried out owner-builder works on the property being sold
The Section 32 Vendor Statement
The Section 32 Vendor Statement (also known as the "Vendor's Statement") is a mandatory disclosure document required under section 32 of the Sale of Land Act 1962 (Vic). It must be provided by the vendor to any prospective purchaser before the contract of sale is signed.
Where the vendor has carried out owner-builder works on the property within the prescribed period under s137B of the Building Act 1993, specific additional documents must be included in the Section 32 Vendor Statement.
Critical: The disclosure obligations under s137B must be satisfied before the purchaser enters into the contract of sale. Providing the required documents after the contract is signed does not cure the non-compliance — the contract remains voidable at the purchaser's option until settlement.
Required Documents in the Section 32
When selling a property on which owner-builder works have been carried out within the prescribed period, the Section 32 Vendor Statement must include all of the following:
Owner-Builder Defects Inspection Report
Always RequiredWhat is it?
A report prepared by a prescribed building practitioner on the current condition of the building, identifying any defects in the owner-builder work. This is commonly referred to as a "Section 137B Report" or "Owner-Builder Condition Report."
Requirements
Certificate of Domestic Building Insurance
If works exceed $16,000What is it?
A certificate evidencing that the vendor has obtained Domestic Building Insurance (DBI) in respect of the building. The insurance protects the purchaser if the owner-builder vendor dies, disappears, or becomes insolvent after the sale and a defect emerges.
Requirements
Statutory Warranties (s137C)
Implied by LawThe three warranties under s137C of the Building Act 1993 are implied by law into every contract of sale to which s137B applies. They do not need to be expressly inserted into the contract — they apply automatically. However, practitioners should be aware of them and ensure that the contract does not contain any provision purporting to exclude or limit them (which would be void).
Workmanship
Work carried out in a proper and workmanlike manner
Materials
Materials were good, suitable, and (unless stated) new
Compliance
Work carried out in accordance with all laws and legal requirements
Critical Timing Requirements
Identify Owner-Builder Works
The vendor and their practitioner must identify all owner-builder works carried out on the property within the prescribed period. This requires a review of building permits, council records, and the VBA public register.
Commission Defects Report
The vendor must engage a prescribed building practitioner to prepare the defects inspection report. The report must be no more than 6 months old at the time the contract is entered into. Allow sufficient time for the report to be prepared before listing the property.
Obtain Insurance (if required)
If the value of works exceeds $16,000, the vendor must obtain Domestic Building Insurance before the contract is entered into. This cannot be done retrospectively after the contract is signed.
Include in Section 32
The defects report and insurance certificate must be included in the Section 32 Vendor Statement and provided to the purchaser before the contract of sale is signed.
Ensure Report Currency at Exchange
If the property is listed for sale and the defects report is approaching 6 months old, a fresh report must be obtained before the contract is entered into. A stale report does not satisfy the s137B requirements.
Common Pitfalls for Practitioners
Failure to identify owner-builder works
Vendors often do not realise that works they carried out years ago constitute owner-builder works. Practitioners must ask specifically about all building works carried out on the property in the past 7 years, not just those for which permits were obtained.
Stale defects report
If the property has been on the market for several months, the defects report may expire (become more than 6 months old) before a contract is entered into. A fresh report must be obtained.
Incorrect cost assessment
Vendors may underestimate the cost of works to avoid the insurance requirement. The cost includes both materials and labour, and the $16,000 threshold applies even if the contract has been split into smaller amounts.
Insurance obtained after contract
Domestic Building Insurance cannot be obtained retrospectively. If the vendor has not obtained insurance before the contract is signed, the contract is immediately voidable.
Works not covered by the report
The defects report must cover all owner-builder work on the property. If the vendor has carried out multiple stages of works, all stages must be covered.
On This Page
Section 32 Checklist
Cannot Be Contracted Out
The requirements of s137B cannot be excluded or limited by agreement. Any provision in a contract purporting to waive these requirements is void. Once the vendor is in breach, there is little they can do to prevent the purchaser from voiding the contract prior to settlement.