What is a Form 1 – Vendor’s Statement?
The Form 1 – Vendor’s Statement is a required statutory disclosure statement that must be provided by a vendor to a purchaser of land. It is a prescribed requirement under the Land and Business (Sale and Conveyancing) Act 1994 (Act).
The Form 1 contains certain details relating to the property being sold and must take the form set out in the regulations. It must set out:
- the purchaser’s “cooling-off” rights; and
- the particulars required under the regulations, relating to:
- all mortgages, charges and prescribed encumbrances affecting the land subject to the sale;
- if the vendor acquired a relevant interest in the land within 12 months before the date of the contract of sale – all transactions relating to the acquisition of the interest occurring within that period; and
- any matters prescribed by the regulations.
This information is based on responses received from statutory authorities, council searches and the vendor’s knowledge of the property.
The Form 1 discloses all required information so that a purchaser is aware of any particulars of the land that could affect their purchase and can make an informed decision on whether or not to proceed with the purchase. If the purchaser is not satisfied with the information contained in the Form 1, the purchaser has the right to withdraw from the contract during the “cooling off” period.
Service of Form 1
The Form 1 (signed by the vendor) must be served on the purchaser by no later than 10 clear days before the settlement date.
It may be served either before or after the signing of the contract and can be served in one or more of the following ways:
- by delivering it to the purchaser personally;
- by posting it by registered post to the purchaser at its last known address;
- by faxing it to a fax number provided by the purchaser; or
- by emailing it to an email address provided by the purchaser.
Whilst the recommended practice is for the purchaser to acknowledge receipt of the Form 1 upon service as it is evidence of receipt by the purchaser, this is not a requirement under the Act.
There are cases where judges have found a Form 1 to be validly served by a purchaser, even though the method of service did not comply with these statutory requirements. In Birdseye v The Registrar-General of Lands Title Office and W & R Pty Ltd  SADC 130, her Honour Judge Shaw found that a Form 1 was served on the purchaser even though it was served by ordinary post, as it was sufficient if the contents of the Form 1 were brought to the attention of the purchaser.
We always recommended to our clients and referral agents that the Form 1 is served in accordance with the express requirements of the Act.
A purchaser of land is entitled to a “cooling-off” period, during which the purchaser may withdraw from the contract by giving written notice to the vendor or the agent acting on behalf of the vendor.
It is a reasonably short period of time (2 business days) in which the purchaser can review their decision to purchase the property and can withdraw from the contract if necessary.
The date of service of the Form 1 will determine when the “cooling-off” period commences and expires:
- where the Form 1 is served after the contract is signed by all parties – the “cooling off” period will commence on the next business day after the Form 1 was served and expire on the end of the second business day after it was served; or
- where the Form 1 is served before the contract is signed by all parties – the “cooling off” period will commence on the next business day after the contract was signed by the last of the parties and expire on the end of the second business day after it was signed by that party.
The method of “cooling off” must comply with the requirements of the Act for giving written notice to the vendor or the agent acting on behalf of the vendor.
Where a purchaser exercises its “cooling off” right and withdraws from the contract, it is entitled to the return of money paid (deposit) under the contract, except that if the deposit does not exceed $100.00 then the vendor is entitled to retain that money.
Not all purchasers of land have the right to cool-off. For example, the “cooling-off” period does not apply if:
- the purchaser, before signing the contract, received independent advice from a legal practitioner concerning the contract and the practitioner signed a regulation approved certificate that the practitioner gave the purchaser that advice; or
- the property is being purchased by auction; under a contract for the sale of land (other than residential land) by a company; or under an option to purchase and that option is exercised.
Verification of the Form 1
Where an agent acts on behalf of a vendor, the agent must:
- ensure that the prescribed inquiries are made into the matters as to which particulars are required in the Form 1;
- sign a certificate (known as the Part D certificate) in the form required by the regulations certifying that the responses to the inquiries confirm the completeness and accuracy of the particulars in the Form 1 (subject to any applicable exceptions);
- ensure that a copy of the certificate is given to the vendor within 48 hours after the agent has signed the certificate; and
- ensure that the certificate is endorsed on, or attached to, the Form 1 at the time of service on the purchaser.
Form 1 must be accurate
The Form 1 must be accurate as at the date of service on the purchaser.
This includes the statutory searches which must be accurate as at the date of service. As the searches become “older”, there is an increased chance that they may be inaccurate and a change in circumstances has occurred.
If, after the service of a Form 1 but before the purchaser signs the contract, circumstances change so that if a fresh form 1 was to be prepared there would have to be some change in the particulars contained in the Form 1, then the Form 1 will be regarded as defective until a Notice of Amendment is served and when such a notice is served it will be presumed that the Form 1 was served, as amended by the Notice of Amendment, on the date of service of that Notice.
Non-compliance with the Act
Any non-compliance with the requirements of the Act relating to Form 1s could potentially lead to serious consequences to the vendor and (if an agent acts on behalf of a vendor) the agent.
Whilst the Act does not render the contract void as a consequence of a failure by the vendor to provide a valid Form 1, certain remedies are provided to the purchaser. Broadly speaking the remedies are:
- a right to cool-off; or
- a purchaser’s right to affirm the contract and seek a remedy under the Act or at common law.
There are court cases where judges have found that the “cooling-off” period does not commence to run until the purchaser had been served with a valid Form 1 which complies with the Act. If a Form 1 is defective, a purchaser may exercise a right to “cool off” and withdraw from the contract.
A purchaser may also apply to a Court for an appropriate remedy. The Court may, if satisfied that the purchaser has been prejudiced by the failure to comply with this Act, exercise any one or more of the following powers:
- avoid the contract and make such other orders as the Court thinks necessary or desirable to restore the parties to the contract to their respective positions before entering into the contract (including refunding any deposit paid);
- award such damages as may, in the opinion of the Court, be necessary to compensate loss arising from the non-compliance; and
- make such other orders as may be just in the circumstances.
Damages may be awarded against:
- the vendor; or
- if it appears that the purchaser has been prejudiced by a failure on the part of an agent to carry out duties – the agent, or both.
It is an offence under the Act to comply with the statutory requirements and it carries a maximum penalty of $10,000.00.
There are limited defences available in the event of a charge for an offence or civil proceedings brought by a purchaser.
The Form 1 is an important statutory disclosure statement for any purchaser of a property. It is critical that a Form 1 is prepared in accordance with the Act and does not contain any defects. There may be serious consequences to both a vendor and agent for any defective or invalid Form 1.
Our team of registered conveyancers and property lawyers have extensive experience in the preparation of a Form 1 for vendors and agents. If you need assistance with preparing a Form 1, please contact Michael Stannard or Gemma Wallace.
The content of this article is intended to provide a general guide to the subject matter. It is not legal advice. Specialist advice should be sought about your specific circumstances.
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