Buying a House in Victoria? Here’s What Your Contract Should (And Shouldn’t) Say

You’ve found a property you love, your offer is accepted, and excitement is building. In this whirlwind of emotions, the real estate agent presents you with a formidable document: the Contract of Sale. 

For many Victorians, this dense, legalistic packet is the most intimidating part of the entire home-buying journey. The pressure to sign can be immense, especially in a competitive market.

However, this document is the blueprint of your purchase. It’s not merely a formality; it’s a legally binding agreement that dictates every aspect of the transaction. Signing it without a thorough, expert understanding is one of the biggest financial risks a buyer can take.

Understanding its key components is not just empowering-it’s essential for protecting your investment. Let’s demystify the Victorian Contract of Sale and explore what you must look for before you put pen to paper.

The Non-Negotiables: Key Clauses in a Standard Contract

A standard REIV (Real Estate Institute of Victoria) contract contains several critical clauses designed to protect the buyer. If these are missing or have been altered, it’s a major red flag.

1. Subject to Finance: This is your most crucial safety net if you require a loan. It makes the contract conditional upon you obtaining formal loan approval from your lender on terms satisfactory to you. Without this clause, if your finance falls through, you could lose your deposit and be sued for breach of contract. A strong finance clause will specify the exact amount of the loan required and a realistic timeframe for approval (typically 14-21 days).
   
2. Subject to Building and Pest Inspection: This clause allows you to commission professional reports on the property’s structural soundness and any pest infestations. If the inspections reveal significant defects (e.g., major structural damage and/or major pest infestations),this clause allows you to withdraw from the contract without penalty or negotiate a price reduction with the vendor.
   
3. Cooling-Off Rights: In Victoria, a buyer has a statutory three-business-day cooling-off period after signing a contract, during which they can withdraw for any reason. If you exercise this right after the vendor has accepted your offer, there is a cost involved which is typically 0.2% of the purchase price, a small price for avoiding a costly mistake.  
   
   The 3-day cooling-off period does not apply if –
   
   – you bought the property at or within 3 clear business days before or after a publicly advertised auction;
   – the property is used mainly for industrial or commercial purposes;
   – the property is more than 20 hectares in size and is used mainly for farming;
   – you and the vendor previously signed a similar contract for the same property, 
   – you are an estate agent or a corporate body.

Beyond the Standard: The Power of Special Conditions

Sometimes, the standard clauses aren’t enough. This is where “special conditions” come in. These are custom clauses negotiated between the buyer and vendor to address specific circumstances related to the property or the sale.

Why might you need one?

• Subject to Sale of Another Property: If you need the proceeds from selling your current home to buy the new one.
  
• Specific Inclusions/Exclusions: To explicitly list which fixtures and fittings are included (Inclusions e.g. dishwasher, air conditioning, remotes to garage doors, pool equipment which must be detailed, etc. Exclusions e.g. Vendor may wish to keep the outside barbeque which may currently be bolted to the patio and/or remove TV brackets from the walls inside the property- this could mean damage the vendor may not wish to undertake) to avoid dispute on settlement day.
  
• Early Access: To request access to the property for purposes like taking measurements before settlement.
  
• Rectification Work: If a building inspection identifies an issue, a special condition can be added requiring the vendor to fix it before settlement.

A skilled conveyancer will advise you on whether a special condition is necessary to protect your unique interests and will draft the precise legal wording to ensure it is enforceable.

Red Flags: What a Professional Eye Spots

This is where the value of expert review becomes undeniable. A novice might skim over seemingly minor details, but a professional knows where hidden dangers lie. Here are just a few of the red flags we scrutinise for:

• Unusual Covenants or Restrictions: Buried within the title documents might be a covenant requiring all houses in the street to be built of double-brick or only one dwelling can be constructed on the property, or a restriction prohibiting you from parking a boat or caravan on the property. These can significantly impact your future enjoyment and plans.
  
• Incorrect Boundaries: The contract dimensions might not match the plan of subdivision shown on the Title. This could mean that fancy new shed or deck you loved is actually built on your neighbour’s land.
  
• Unapproved Structures: Does the property have pergolas, decking, or extensions? If these aren’t noted on the building permits within the vendor’s statement (Section 32), they may be illegal works. This can affect your insurance and force you to rectify them at your own cost down the track.
  
• Onerous Owners Corporation Rules: For units and townhouses, the Owners Corporation rules might contain surprising restrictions on pets, renovations, or even renting out your property.

A Real-World Example: How Meticulous Review Saved a Client

We recently acted for a young couple purchasing their first home in Melbourne’s inner suburbs. They were thrilled and had already signed the contract, wisely making it subject to our review.

During our due diligence, we discovered a seemingly harmless covenant on the title: it stipulated that any construction on the property required the written consent of a specific, long-defunct company. The real estate agent had dismissed it as a “historical oddity.” Our experience told us otherwise.

We investigated further and confirmed that the vendor’s recently renovated kitchen and bathroom, a major selling point of the property, had been completed without seeking this consent. This rendered the works technically unlawful. The potential consequences for our clients were severe: future difficulty obtaining insurance, legal challenges from a future landowner, and complications when they eventually came to sell.

Armed with this information, we went back to the vendor’s conveyancer. The resulting negotiation led to the vendor obtaining retrospective approval from the current successor company and covering all associated legal costs, entirely mitigating the risk for our clients before settlement proceeded. Our review didn’t just save them from future legal headaches; it protected the fundamental value of their new home.

The Contract of Sale is your first and best line of defence. Don’t let the excitement of the moment blind you to the details that define your investment.

Don’t sign anything until you’re certain. 

Contact Skilled Conveyancing today on 03 9729 3512 or email us to get your contract reviewed today. 

Our meticulous approach ensures your property dreams are built on a solid foundation, not hidden flaws.