Legal Readiness for Property Buyers

What every serious purchaser should understand before signing

Buying property in Victoria involves more than reviewing a contract and booking a settlement date. Whether the purchase is residential, off-the-plan, or a development site, legal risks are embedded in every stage of the transaction. This guide outlines key legal issues to consider before settlement.

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1.Cooling-Off Rights Are Limited

In Victoria, buyers usually have a 3-day cooling-off period, but there are important exclusions. The right does not apply if the property was purchased at auction, within three days of an auction, or if the buyer is a corporate entity. The cooling-off period also does not apply to commercial or industrial property.

If cooling-off is exercised, the vendor may retain either $100 or 0.2% of the purchase price (whichever is greater). However, this period is not a due diligence buffer. If you're not confident in the purchase, get legal advice before signing.

2. Finance Conditions Must Be Followed Precisely

If the contract is subject to finance, the buyer must comply with all timeframes and obligations. This includes applying for finance without delay and notifying the vendor in writing within two business days if finance is declined.

Failure to notify in time may result in losing the right to terminate the contract. Even worse, the buyer may become liable to complete the contract without funding.

3. Insurance Risk Passes Upon Contract

Under section 34 of the Sale of Land Act 1962 (Vic), the risk of damage to the property passes to the purchaser once the contract is signed, unless otherwise stated. This means if the property is damaged before settlement and the vendor is underinsured, the buyer bears the loss.

It is good practice to obtain building and contents insurance immediately upon signing.

4. Review the Section 32 Vendor Statement Thoroughly

Vendors must disclose key information under section 32, including title details, outgoings, easements, planning overlays, and any notices from public authorities. However, omissions or errors are common.

Always review:

• Whether the title contains any restrictive covenants or easements

• If the property is affected by a Section 173 Agreement

• Whether any planning overlays (e.g. heritage or bushfire) apply

A solicitor or conveyancer should cross-check these disclosures against public records via authority certificates and searches. In some cases, misleading or omitted disclosures may allow the purchaser to rescind the contract, but only before settlement.

5. Understand the Contract of Sale Terms

The standard Law Institute of Victoria contract includes general conditions, but most vendors add custom special conditions. These may alter or override your rights significantly.

Look out for:

• Late settlement penalties or default interest

• Broad vendor disclaimers about building condition

• Clauses limiting rights to compensation or rescission

Many buyers focus on price and forget to negotiate terms. Getting legal advice before signing is essential, especially for off-the-plan, commercial, or development property.

6. Settlement Delays Can Trigger Penalties or Termination

Delays in settlement carry financial consequences. Most Victorian contracts allow vendors to charge penalty interest at a rate above the default statutory rate (currently set by the Penalty Interest Rates Act 1983). If settlement is delayed excessively, the vendor may issue a rescission notice and retain the deposit.

If the vendor is in breach, the buyer’s remedies are usually limited to recovering legal costs and possibly rescission. General damages are rarely available unless negotiated.

7. Verify Boundaries and Physical Improvements

The title plan does not always reflect what's on the ground. Buyers should confirm that fences, driveways, and structures are within the legal boundaries.

If there is any doubt, consider commissioning a licensed surveyor. This is particularly important for corner blocks, subdivisions, or lots near reserves, easements, or utility corridors.

8. Check Fixtures and Chattels

Only items listed in the contract are guaranteed to remain at settlement. Fixtures are generally considered to include ovens, built-in wardrobes, and permanently fixed appliances. Moveable items like dishwashers, curtains, and furniture may not be included unless specifically stated.

Inspect the property just prior to settlement and raise any discrepancies in writing immediately.

9. Ensure Legal Use and Compliance

Buyers should not assume that the existing use of a property is lawful. Planning laws change, and past use rights may no longer be valid.

Check:

• Whether the zoning supports your intended use

• If prior works were permitted and have final occupancy certificates

• Whether any council notices, orders, or encumbrances affect the use of the land

If the property is being purchased for development or redevelopment, consult with a planning professional or council before committing.

10. Decide on Ownership Structure Early

When purchasing with another party, determine whether title will be held as:

• Joint tenants (each party owns the whole and the survivor inherits), or

• Tenants in common (each party owns a defined share that passes via their estate)

This decision affects taxation, estate planning, and asset protection. It should be discussed with your accountant and legal advisor before signing.

Final Thoughts

Purchasing property in Victoria is a legal transaction with long-term consequences. Many issues, including title restrictions, planning overlays, boundary disputes, or defective works, may not be visible on inspection.

Working with an experienced property lawyer or conveyancer reduces risk and ensures the contract reflects your interests. The cost of early legal advice is minimal compared to the financial and legal consequences of post-settlement problems.

This content is for general information only and does not constitute legal advice. For advice specific to your situation, please contact MWBL Consulting.