More than just bricks and mortar – Understanding Form 1 Disclosure Statements
Did you know that there are many hidden facts about a house that you need to tell a potential buyer about before you can sell? Just like a building inspection will reveal the hidden secrets behind the walls in a house, the Form 1 will explain all the hidden legal secrets that are not written on the walls either.
When you are selling your property, the vendor is responsible for providing a Form 1 Vendor’s Disclosure Statement to the purchaser so that they can be fully aware of what is hidden behind the bricks and mortar. This is a document that contains certain details about the property being sold. It is required under section 7 of the Land and Business (Sale and Conveyancing) Act 1994. The Form 1 will include the details of the parties to the land and the transaction, the purchaser’s cooling off rights, a statement by or on behalf of the vendor and a certification by or on behalf of the agent as to the particulars contained in the document. The substance of the Form 1 is a table containing all the details about any mortgages, charges, encumbrances and other prescribed matters that affect the property and title which should be brought to the attention of the purchaser.
One important fact to be aware of when serving and receiving a Form 1, is that the cooling off period ends 2 clear business days after the Form 1 has been served on the purchaser (unless the contract is signed after the Form 1 has been served, in which case it will be 2 clear business days following this). The deposit is usually due the following day after the expiration of the cooling off period.
Below are some important items and a description of each that will help you to understand the contents of a Form 1.
An easement is a right to cross or otherwise use someone else’s land for a specified purpose. For example, an owner of land might have a right to pass over a neighbours land for the purpose of accessing their own land. If an easement is registered on the title, there should be a document provided that created the easement.
A restrictive covenant is a limitation on the use of land and is usually in the form of an encumbrance registered on the title, but may come in other forms too. The document registering the interest on the title should be included in the Form 1 to outline the restrictions and permitted use of the land.
Lease, tenancy or agreement to licence:
A lease or such other document, will contain the rights to occupy the land. Such leases, tenancies and licences must be disclosed.
Development Act Items:
Where there are building approvals, current insurance policies that apply as an owner-builder or land management agreements that exist with the council and in relation to the Development Act 1993, these items must be disclosed in the Form 1.
Where there are restrictions on the use and development of the property that are effected by heritage listings and other matters, these need to be disclosed by the vendor. Often these will not be apparent from government searches and the vendor must provide the relevant information.
Where the title is part of a strata or community corporation (for example, units etc), information relating to the corporation must be disclosed including the fees, levies, insurance and rules/by laws.
Transactions in the last 12 months:
Where there have been transactions on the title, the details of the previous owners should be supplied. Often these details will not show up in government searches and enquiries must be made with the vendor directly.
If you are selling your house, or are a real estate agent needing a Form 1 prepared for their vendor, Robbins Conveyancing can order all necessary government prescribed searches and prepare the Form 1 on your behalf. Just get in touch with us today to discuss your needs.