What is a Vendor Questionnaire and why is it important?
The fundamental purpose of a Form 1 statement (cooling-off notice) is to provide Purchasers with the knowledge they require to make an informed decision when entering into a contract.
To prepare a Form 1, information is gathered from State and Local Governments and third-party resources as required. There is great importance placed on collating, reading, and understanding the information contained within these products to ensure the Form 1 is prepared accurately and to secure the Contract.
There is another piece of the puzzle which is vitally important, if not more important, and that is the answers provided in the Vendor Questionnaire.
The Vendor Questionnaire is often treated as an obligatory formality, one that a Vendor may just breeze through without considering the ramifications of the information or lack of information, they are providing. In reality, it could cause the failure of an Auction Contract, just days prior to settlement.
A case in point being a recent judgment made by the Full Court of the Supreme Court of South Australia on 19 February 2021 (matter of Cheshire & Anor v Jennings & Anor (No 2) ) which allowed the avoidance of an Auction Contract and the return of the deposit paid, plus interest, to the Purchasers.
How did this particular transaction go wrong?
In this matter, the Purchasers claimed that an investigation made by the Department of Defence to determine the existence, nature, and extent of hazardous substances and contamination in the surrounding areas of the Edinburgh Royal Australian Airforce Base, constituted an environmental assessment that had not been disclosed in the Form 1. Had the Purchaser known of the environmental assessment, they would not have purchased the property at Auction. After a repealed dismissal of their claim by the Trial Judge, the Full Court of the Supreme Court ruled in favour of the Purchasers, some 26 months after the property was purchased at Auction.
The court found that the Vendors were aware of the investigation by the Department of Defence due to the information campaign which included regular meetings and door knocking as well as coverage on social media and in newspapers. The answer in the negative, by the Vendors to the question: “Is the Vendor aware of an environmental assessment of the land or part of the land ever having been carried out or commenced (whether or not completed)?” in the Vendor Questionnaire was found by the court to have been answered incorrectly and that it is not responsible to answer such questions with a narrow perspective.
What do we suggest?
To Vendors, we acknowledge that Agents also play a role. Agents need to stress the importance of the answers or lack of answers to a Vendor Questionnaire and Vendors, please be on notice. The questions are to be answered truthfully and to the best of the Vendors knowledge. It is always better to provide more information and err on the side of caution, than leave vital information out.
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.