Signing for Vendor – Who can sign a Form 1 and at what risk?

The topics around the preparation, signing and service of Form 1 documentation remain some of the most highly debated in the conveyancing and real estate industries in South Australia. Some common practices in relation to the signing of the Form 1 may be leaving agents heavily exposed to the risk of litigation; in particular, the signing of Form 1 Part C on behalf of the vendor.

Part C – The vendor’s declaration

First let’s remind ourselves of what the Form 1 is; it is the vendor statement. A Vendor Questionnaire must always be completed and signed by a vendor as they may have crucial information for the Form 1 which may not be included in the prescribed enquiries (searches). Signing Part C of the Form 1 is the Vendor’s opportunity to confirm that all the information contained within the document is true and correct at the time of service. When a third party (such as the Real Estate Agent) signs Part C, they are accepting the responsibility of the vendor in verifying the details are correct.

The risk

If a Form 1 is found to be defective because information known to the vendor was not disclosed, who ever signed Part C of the Form 1 is liable for not including that information. Liability to the signatory may not be limited to the implications from a cancelled contract. Should issues arise after settlement due to information not being disclosed, the purchaser may have claim for compensation well after settlement.

A case for consideration

The vendor of a rural property disclosed to the purchaser directly through verbal discussions that an easement to run electrical infrastructure through neighbouring council-owned land had been applied for at the time the dwelling had been built. The Certificate of Title for the property being transacted was not subject to such an easement and as such there was no reference to it in the Form 1 prepared by and signed at Part C by the agent. After settlement, the new owner applied to upgrade to 3 phase power but was advised that he had no right as the electrical run to his property was illegally running through the council-owned land. The vendor advised they had never seen the Form 1 prior to it being served on the purchaser and that the agent had done so of their own accord. While not pursued by the purchaser, the agent was exposed to a huge amount of risk for potential compensation to the purchaser.

Our recommendation

At Form 1 Services Adelaide – Tuckfield Agent Solutions, we strongly suggest to all agents that they avoid the risk associated with signing Part C on the vendor’s behalf. It is always best practice for the Vendor to sign Part C. At Tuckfield Agent Solutions we offer the convenience of arranging for the vendor to electronically sign Part C as part of our service. This is particularly convenient in situations where the vendor lives overseas or interstate.

Check out Form 1 Services Adelaide or Contact our office on: (08) 8344 1215.
Tuckfield Agent Solutons, Adelaide’s Form 1 specialists!

Article written by Jonathan Gilligan

Please note that the information contained in this article is of a general nature only and does not constitute legal advice. Tuckfield Agent Solutions does not take responsibility for any errors or omissions obtained from the use of this information.