HELD LAWYERS

Est.1991

Property & Commercial Law

Law Matters

October 2014 Newsletter

Welcome
In this months bulletin, we examine: changes to sale documentation for property; and building
claims for latent defects.
If there are topics you would like us to look into, please let us know.
Each bulletin touches on a broad range of topics in an easy to read, practical way. We aim to
give you a brief, but better understanding of current issues as they arise, and food for thought!
We are happy to visit you before the end of 2014 and provide staff or client briefings about a
range of topics or matters of interest to you. Please feel free to contact us in that regard.
We hope to see you (again) soon in person.
Adam Held
Principal

Contract of Sale of Real Estate new

provisions 1 October 2014

Vendors Section 32 Statements new

disclosure requirements 1 October 2014

From 1 October 2014, a number of changes have come

into force. These include:

In our July and August 2014 Newsletters we discussed

the new disclosure requirements for Vendors Section
32 Statements, which came into effect from 1 October
2014.

definition of Section 32 Statement (General

Condition 1.3)
updated Release of Security Interest under the
Personal Property Securities Act 2009 (GC 7)
There is now a new form of Contract.
Unsigned Contracts prepared before 1 October 2014
need to be amended to comply with these changes,
or face being voidable at the purchasers option up to
settlement.

Sale of Real Estate Regulations 2014 new

schedules 1 October 2014
From 1 October 2014, the Sale of Real Estate
Regulations 2014 and schedules have replaced the
Sale of Real Estate Regulations 2005 and schedules.

Under the new section 32 requirements, a vendor:

must provide a copy of the Register
Search Statement (Section 32I(a)).
The term Register Search Statement is not
defined and does not appear in any Victorian Act or
regulations. The term Register Search Statement is
used by Land Victoria and is generally understood to
be a title search. It is not sufficient to attach a copy
of the duplicate certificate of title to the section 32
statement, a Register Search Statement must be
attached.
must specify when an Owners Corporation is inactive
(Section 32F(1)(b)). An inactive owners corporation is
not required to provide either an Owners Corporation

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Certificate or the information required by Section

151 of the Owners Corporations Act 2006 (Vic.).
However, Section 11(1) of the Sale of Land Act 1962
(Vic.) states that A person cannot sell a lot affected by
an owners corporation unless the Vendor or the owners
corporation has a current insurance policy in accordance
with the Owners Corporations Act 2006 (Vic.) for any
insurance required by that Act to be effected by the owners
corporation. Section 11(2) states that If a lot is sold in
contravention of subsection (1) the Purchaser may avoid
the sale at any time before the contract is completed..
Section 7(1) of the Owners Corporations Act 2006
(Vic.) exempts the Owners Corporation from compliance
with a number of provisions of the Act in the case of a
two (2) lot subdivision only, including the requirement to
have Owners Corporation insurance pursuant to Sections
59, 60, 61 and 62. Owners of inactive 3 or more lot
subdivisions should be aware of the risk of a purchaser
rescinding in reliance on Vendor non-compliance with
Section 11.
is no longer required to attach a section32
statement to the contract of sale (Section 32(1)).
The problem with this approach is it may make it harder
to prove the purchaser received a signed section 32
statement at the time the contract was signed. It is
recommended that a section 32 statement continues to
be attached to the contract of sale.

pure economic loss occasioned by latent defects in the

common areas of the property which the contractor had
built (Brookfield Multiplex Ltd v. Owners Corporation
Strata Plan 61288 & Anor [2014] HCA 36).
The subsequent purchaser investors were not seeking
damages for property damage but rather for pure
economic loss, being damages for the diminished value
to the Building and the loss of rents and income during
the period of and due to the rectifying of the defects.
The general rule is that there is no liability in negligence
to avoid against the risk of anothers pure economic loss.
The vulnerability of the plaintiff is an important (if not
determinative) factor. A useful guide in determining
whether a builder is exposed to a negligence claim for
latent defects is the distinction drawn between persons
buying a dwelling for use as their own home (vulnerable)
and buildings purchased for commercial and investment
purposes (the case here). This is because persons
buying residential homes are more likely to be deemed
vulnerable due to their reliance on builders to exercise
due care and their inexperience or perceived unequal
bargaining power in entering contracts.
This case only relates to liability of builders in negligence
for pure economic loss. Builders are still potentially liable
to subsequent purchasers for property damage claims
pursuant to statutory warranties under the relevant
state-based home building legislation.

Referrals

who (subject to the transition provisions) does not use

the new form of Section 32 Statement from 1 October
2014 may result in a purchaser deciding to exercise
their right to rescind the contract pursuant to the new
Section 32K(3).

Should you require non-legal assistance with various

matters, we are happy to provide you with contact details for
a range of service providers, including financial institutions,
accountants, real estate agents, brokers, etc.

must provide the due diligence checklist where there is

no selling agent (Section 33).

Property Law including conveyancing and leasing

(source: LPLC Bulletin, September 2014)

Builder pure economic loss not liable to

subsequent purchaser for latent defects
The High Court has overturned the decision of the NSW
Court of Appeal, which held that the builder of strata-titled
serviced apartments owed a duty of care to the Owners
Corporation to take reasonable care to subsequent
investor purchasers of the apartments from suffering pure
economic loss resulting from latent defects in the building.
The High Court held that the contractor under a design
and construct contract did not owe a duty of care in tort
to the body corporate of a strata title scheme to avoid

Areas of practice
Commercial and Business Law
Banking and Finance Law including mortgages
and guarantees
Wills and Estates Law
Intellectual and Industrial Property Law
Litigation
If you would like further details or assistance or to discuss
information contained in this publication or generally,
please do not hesitate to contact us. For copies of
this and other publications, visit our website at www.
heldlawyers.com.

Disclaimer
This publication is intended to provide commentary and general information only. It should not be relied upon as legal advice. It is not intended to be a complete
or definitive statement of the law on the subject matter covered. Further professional advice should be sought before any action is taken in relation to the matters
described in this publication. Persons listed may not be admitted in all jurisdictions.
Liability limited by a scheme approved under Professional Standards Legislation

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