After the contract is signed by both the vendor and the purchaser, the vendor (usually via the agent) is required to give the purchaser a Form 1 under S7 of the Land and Business (Sale and Conveyancing) Act 1994. This is also known as the Vendor’s Statement, and it contains important information about the land, and the purchaser’s right to cool off.
The Form 1 is prepared by the agent (if there is one representing the vendor) and the agent must also certify that all the right inquiries have been made, and that the particulars are accurate and complete. A defective Form 1 can have an effect on when the cooling-off period begins to run, although purchasers should not be expected to double-check all the information.
Information contained on the Form 1
The Form 1 is in a number of parts and includes:
· Details of the parties to the contract (Part A);
· Information about cooling off (Part B) (NB for further detail regarding cooling off, see below); and
· Certification by the vendor or the agent that the Form 1 contains all the required particulars (Part C) and that the particulars are accurate (Part D).
The Schedule then sets out all prescribed particulars in relation to the land, including mortgages, charges or prescribed encumbrances affecting the property and specifies which will be discharged on or before settlement. These should be discussed with the land agent and any suggestion that a particular item need not be of concern (such as a road widening plan or a zoning requirement) should be independently checked.
S10 of the Land and Business Sale and Conveyancing Act 1994 requires that the Form 1 is accurate at the time of service on the purchaser, and if it is not, the Form 1 is considered to be defective and may extend the time for cooling off. If there is any doubt about the information contained in this part of the Form 1, a purchaser should seek advice immediately.
Any transactions involving transfers of the property that have taken place in the past twelve months are also shown on the Form 1, as it gives an indication of whether the home is being resold after a facelift or has actually been a long standing family home. If the former, full inquiries should be made as to the reason for the resale. A more thorough examination of the property can be made (for example, to look for hidden salt damp) as the previous owner may have discovered something that will seriously affect the home in the future and is reselling to avoid it.
With strata title units and community titles certain information must be given when requested such as extracts from meetings detailing rules and guidelines for the operation of the group, see strata and community titles.
Information not contained on the Form 1
While a Form 1 sets out various matters that a vendor is required to reveal, other matters may not be so easily discovered, as many factors that may seriously affect a purchaser's enjoyment of a home are not required by law to be disclosed, and therefore will not be in the Form 1. The Form R3, made available to prospective purchasers during the marketing period serves as a useful checklist for purchasers to make their own inquiries about such matters.
The vendor does not have to reveal information beyond the boundaries of the property. Ask the neighbours and the local council to ascertain whether or not there are any proposals relating to neighbouring land that could affect the peaceful occupation of the property.
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