Common Pitfalls When Buying Property in Victoria (Australia)

1. Signing an Unconditional Contract Too Early

One of the most common risks is signing a contract without appropriate protective conditions, such as:

• Finance approval conditions;

• Building inspection conditions; or

• Pest and termite inspection conditions.

If finance is later declined, or the bank valuation comes in lower than the purchase price, the buyer is generally still legally required to complete the purchase. Failure to do so may result in:

• Loss of deposit;

• Default interest; and/or

• Further claims for damages by the seller.

 

2. Assuming the Section 32 Disclosure Contains Everything

In Victoria, sellers are generally required to provide a Section 32 Vendor Statement. While this document is extremely important, it is not a complete substitute for proper due diligence.

A Section 32 usually discloses matters such as:

• Title details;

• Mortgages, easements and restrictive covenants;

• Planning and zoning information;

• Council rates and utilities;

• Owners Corporation information (if applicable);

• Building permits issued within the last 7 years.

However, it often does not adequately reveal issues such as:

• Structural defects;

• Water leaks, mould or termite damage;

• Unapproved renovations or extensions;

• Neighbourhood noise or environmental concerns;

• Land contamination; or

• Whether future development plans are feasible.

Relying solely on the Section 32 can therefore expose buyers to significant risk.

 

3. Failing to Conduct Building and Pest Inspections

A property that appears visually sound may still contain serious hidden defects. Many issues can only be identified through professional inspections, including:

• Foundation movement or subsidence;

• Roof leaks;

• Dampness and mould;

• Termite infestation;

• Drainage problems; and

• Illegal or non-compliant construction work.

If these problems are discovered after settlement, buyers may have limited ability to pursue the seller unless they can establish:

• Misrepresentation;

• Fraudulent concealment;

• Breach of contract clause, obligations or warranties.

 

4. Overlooking Easements and Restrictive Covenants

A property title may contain legal restrictions affecting the use or development of the land, including:

• Easements restricting where structures may be built;

• Restrictive covenants limiting extensions, rebuilding or land use;

• Boundary or common property issues; and

• Usage restrictions benefiting neighbouring land.

These matters are especially important where the buyer intends to renovate, subdivide or redevelop the property.

 

5. Ignoring Zoning and Planning Overlays

A property’s zoning and planning overlays can significantly impact how the land may be used or developed.

Examples include overlays relating to:

• Heritage protection;

• Flood risk;

• Bushfire risk; and

• Environmental controls.

These restrictions may result in:

• Inability to extend or redevelop as intended;

• More difficult permit approvals;

• Increased construction costs; and

• Higher insurance premiums.

 

6. Failing to Investigate Owners Corporation Risks

Where a property is part of an Owners Corporation (such as apartments or townhouses), buyers should carefully assess risks beyond the property itself, including:

• High ongoing levies;

• Potential special levies;

• Major upcoming repairs to roofs, facades, lifts or waterproofing;

• Cladding rectification issues;

• Existing disputes or litigation; and

• Insufficient sinking or maintenance funds.

Annual General minutes and financial statements often reveal far more than the certificate alone.

 

7. Misunderstanding Cooling-Off Rights

Many buyers assume they automatically have a cooling-off period after signing a contract. In Victoria, this is not always the case.

Importantly:

• Properties purchased at auction generally do not have cooling-off rights; and

• Certain contracts signed shortly before or after an auction may also be exempt.

Accordingly, buyers should ensure contracts and Section 32 documents are reviewed before signing, particularly in auction situations.

 

8. Overlooking Special Conditions in the Contract

Risks are not limited to the standard contract terms. Many significant issues are hidden within special conditions, such as:

• Excessive default interest rates;

• Unfavourable deposit arrangements;

• Unreasonable settlement delay fees; or

• Clauses excluding warranties about property condition.

Special conditions can substantially alter the allocation of risk between the parties.

 

9. Relying on Verbal Statements or Advertising

Statements made by agents or in advertisements may not always be legally enforceable. If a particular representation is important, it should be documented in the contract or another formal written agreement.

Examples include:

• Whether certain appliances are included;

• Whether renovations were approved;

• Whether a swimming pool is compliant;

• Whether repairs will be completed before settlement; or

• Whether particular systems or facilities are operational.

Verbal assurances alone are often difficult to enforce later.

 

10. Failing to Clearly Specify Inclusions, Exclusions and Repairs

Common disputes arise over matters such as:

• Light fittings, curtains, dishwashers or air conditioners;

• Garden equipment, security systems or pool equipment; and

• Whether the seller is required to repair leaks, cracks or faulty appliances.

If these matters are not clearly addressed in the contract, the buyer may have limited recourse.

 

11. Relying on Outdated Searches or Certificates

Certificates and searches attached to the Section 32 are issued at a particular point in time. Circumstances may change before signing or settlement, including:

• New caveats;

• Additional mortgages or encumbrances;

• Government notices;

• Planning changes; or

• Outstanding rates or compliance issues.

Updated searches at critical stages of the transaction are often essential.

 

12. Underestimating Eligibility Requirements for Stamp Duty or First Home Buyer Concessions

Buyers intending to claim:

• First home buyer benefits;

• Stamp duty concessions; or

• Principal place of residence exemptions

must strictly comply with the relevant eligibility and residency requirements.

Failure to do so may result in:

• Repayment of concessions;

• Additional duty assessments;

• Penalties; and

• Interest charges.

 

Final Thoughts

Property transactions in Victoria involve significant legal and financial risks. Many of these risks can be reduced through proper due diligence, careful contract review, and obtaining professional legal, financial and building advice before committing to the purchase.

Addressing issues early — rather than after settlement — is often the best way to avoid costly disputes and long-term financial consequences.