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What Does "Due Diligence" Actually Mean?
When people say 'do your due diligence', they're talking about a simple idea. It means taking reasonable steps to investigate a property before you're stuck with it. In real life, that's less about fancy reports and more about asking the right questions early, reading the paperwork with care, and getting the right pros to check the riskier bits.
In Victoria, the government even publishes a plain English 'Due diligence checklist' for home buyers. It's not a box ticking exercise, it's a reminder to step back and ask: what might affect how I use this property, what will it cost to maintain, and what could trip me up later.
Victorian Property Laws: What You Need to Know
Understanding Section 32 Vendor Statements
You'll hear 'Section 32' a lot. That's the vendor statement the seller must give you before you sign. It sets out matters that affect the land, for example title details, easements, covenants, services, and notices. If a seller doesn't provide a proper Section 32, or gives one that's misleading, the contract can come under serious pressure. The obligation comes straight from section 32 of the Sale of Land Act 1962.
Government guidance also nudges buyers to run their own checks rather than relying only on what the seller discloses. The Consumer Affairs Victoria due diligence checklist is the baseline, not the finish line.
Cooling Off Period and Auction Rules
Two more rules shape how you plan your checks:
Cooling off: for most private sales in Victoria, you get three clear business days to cool off after signing, with carve outs, for example when you buy at or near an auction. At auctions, there's no cooling off, so you must do your homework beforehand.
Inspections and timing: Consumer Affairs specifically recommends professional building and pest inspections before you commit. If you're buying at auction in Melbourne, book the inspection and Section 32 review well before the big Saturday.
The Three Layers of Property Due Diligence
Think of due diligence as three layers: the legal title, the land and planning, and the building and running costs. Here's how to tackle each layer in Melbourne.
1. Title and Legal Checks
Title Search and Plan of Subdivision
Order a Register Search Statement and the plan. You're looking for the owner's name, mortgages or caveats, and any restrictions such as easements or covenants. Land Use Victoria and LANDATA are the official sources.
Easements and Covenants
Easements can limit where you build, where you can pave, even where you plant that lemon tree. Covenants can control things like materials or second dwellings. Your conveyancer reads these closely and explains the practical limits.
Section 173 Agreements
If the plan mentions one, it's a planning agreement recorded on title. Your conveyancer obtains it and explains the obligations that will follow you.
Government Interests
Check if the land has been or may be acquired for roads or rail. The Department of Transport and Planning holds land for future projects, which sometimes shows up on title in the name of Roads Corporation or Head, Transport for Victoria.
2. Land, Planning and Environment
VicPlan and the Planning Property Report
Pop the address into VicPlan to see the zoning and overlays, then download the Planning Property Report. This is where you'll see heritage, flooding, bushfire and other overlays that change what you can do to the block. It's free and quick, and it's the Melbourne buyer's secret weapon.
Heritage Overlays
A Heritage Overlay makes alterations and demolition much harder. Local councils manage most local heritage through the planning scheme, while state level places sit on the Victorian Heritage Register. The planning practice notes explain how the overlay works and when permits are needed.
Bushfire Risk Assessment
Parts of Greater Melbourne fringe suburbs, from Warrandyte to Pakenham, can sit in the Bushfire Management Overlay. If the property is in the BMO, extra bushfire measures and permits may apply to new works, which can add cost. The CFA's guidance spells this out and links to the plain English protection measures.
Flooding and Drainage Concerns
Flood overlays have a real bite. The Land Subject to Inundation Overlay or Special Building Overlay can affect ground floor levels, design and insurance. Melbourne Water's resources and council mapping show where water is likely to go, and flood information is being updated across Greater Melbourne right now.
Contamination and Past Land Use
If you're eyeing a former service station site in inner north Melbourne, or a factory conversion in the inner west, check the EPA's Priority Sites Register and the Victoria Unearthed map for past uses and any EPA notices. If anything smells off (figuratively or literally), your conveyancer can arrange an environmental consultant's advice.
Growth Areas Infrastructure Contribution (GAIC)
Buying large parcels on the fringe around Wyndham, Melton, Casey and friends? GAIC can apply on certain events such as buying, subdividing or permits on big land. It's a serious line item in the budget. The SRO and Planning Victoria pages explain what triggers it, the councils it applies to, and current rates.
Big Road and Rail Projects
Check whether a major upgrade is coming that could help your commute or introduce construction impacts. Victoria's Big Build site lists current road projects across metropolitan Melbourne.
3. Building Condition and Day to Day Running Costs
Pre Purchase Building and Pest Inspections
A qualified inspector spots the stuff a Sunday open won't reveal. You want clarity on the structure, damp, termite activity, roof condition and safety issues. Consumer Affairs recommends using qualified professionals and doing it before you sign for an auction.
Services and Utilities
Confirm electricity, gas, water, sewer and NBN availability. Services are normally disclosed in the Section 32, and your inspector can also flag practical issues, for example old terracotta sewer lines.
Property Insurance
In Victoria the legal risk usually stays with the seller until settlement, yet lenders often expect you to insure from the contract date. CAV's checklist for what to do before settlement includes home insurance, which is a sensible belt and braces approach. Read your contract, speak with your conveyancer, and start your cover early so there are no gaps.
Apartment Buyers: Owners Corporation Due Diligence
If the property is part of an owners corporation (OC), your due diligence has extra layers.
Owners corporation certificate: this should reveal fees, special levies, maintenance plans, rules and any disputes. Consumer Affairs Victoria has buyer guidance so you know what to look for. In Melbourne, special levies for lifts, cladding or car stackers can be real money.
Minutes and budgets: your conveyancer requests recent meeting minutes, the balance sheet and the maintenance plan so you can see what's coming.
Common property condition: your building inspector can walk common areas where practical, looking for signs of water ingress, concrete spalling or failed membranes.
Due Diligence for Rural and Lifestyle Properties
On rural residential fringes, due diligence means thinking about tanks and treatment systems, bushfire defendable space and access. On the bayside, think coastal erosion and salty air on fixings. In growth suburbs, factor in estate covenants and GAIC if you're buying big land. The official GAIC guidance will help you avoid surprises.
Melbourne Property Timeline: Auction vs Private Sale
Buying in the CBD, Brunswick or Berwick, the rhythm is similar. Here's a timeline that works:
If It's an Auction Campaign
Week 1: Download the Planning Property Report, pull the Section 32, and book a free conveyancer review. Shortlist an inspector.
Week 2: Run the title and plan, scan VicPlan for zones and overlays, and check flood and bushfire maps. If anything odd appears, ask follow up questions now.
Week 2–3: Get the building and pest inspection done, then chat with your conveyancer about any special conditions you might need agreed in writing before auction.
Auction week: Final review of the Section 32, confirm ID and bank limits for the deposit, arrange insurance cover ready to start on the day if you win. There's no cooling off, so by Saturday morning you're comfortable with the lot.
If It's a Private Sale
Before you offer: Same research, but you can propose a 'subject to building and pest' condition and a finance clause.
After signing: Use the three business day cooling off period wisely. Move quickly on any final questions so you either proceed confidently or step back.
Property Red Flags: What to Watch For
Titles cluttered with restrictions: multiple easements, old covenants, an active Section 173 agreement. Action: your conveyancer explains whether they stop your plans or just need careful design.
Overlays that change costs: BMO or flood overlays can add design requirements and delay permits. Action: ask your building designer or planner to sketch what compliance looks like.
Past industrial use: risk of contamination. Action: check Victoria Unearthed and the EPA Priority Sites Register, then consider an environmental consultant.
Owners corporation gearing up for big spend: recent minutes referring to waterproofing, lifts or façade rectification. Action: price the levy into your offer or walk.
Major transport project: great for long term amenity, noisy during works. Action: read the project page and construction timelines.
What Due Diligence Doesn't Replace
It doesn't replace walking the streets. Ride the tram down Sydney Road at peak hour. Try parking on a wet Wednesday. Check the school timetable, café hours and train frequency. The best reports won't tell you how a place feels on a windy night.
Foreign Buyers: Additional Requirements
If you're a foreign person, Australia currently has a temporary ban on buying established dwellings from 1 April 2025 to 31 March 2027, with limited exceptions. New builds and vacant land are still possible with approval. If you fall into this group, add FIRB approval checks to your due diligence.
How a Conveyancer Protects Your Investment
I've lost count of the times a quick pre auction review has saved a client from a poor fit. Sometimes it's as simple as an obscure easement tucked into a plan from the 1970s. Sometimes it's a flood overlay that turns a dream renovation into a higher finished floor level with steps everywhere. A steady hand helps you:
- Read the Section 32 with a practical lens, not just a legal one
- Order the right certificates first, so you're not paying for noise
- Translate planning jargon into 'can I build the studio out back' and 'how much will that fence actually cost'
- Negotiate conditions with the agent that actually protect you, rather than look nice on paper
Melbourne Property Due Diligence Checklist
- Pull the Section 32 and get a complimentary review
- Download the Planning Property Report and scan VicPlan
- Order the title and plan, read easements and covenants
- Check BMO, flood overlays and Melbourne Water flood info
- Search EPA Priority Sites and past land uses
- For apartments, review the owners corporation certificate and minutes
- Book a building and pest inspection with a qualified practitioner
- If you're on the fringe with larger land, consider GAIC
- Plan for insurance from contract date to satisfy your lender and keep your stress down, even though legal risk usually shifts at settlement
Final Thoughts
Due diligence isn't about turning yourself into a town planner. It's about staying curious long enough to avoid the big, obvious headaches. In Melbourne, where a pretty terrace can sit two streets from a floodway or a cherished shopfront can be tied up in a tight heritage schedule, those questions pay off.
If you'd like a hand, or you just want someone local to sense check your plan, we're here.
Get a complimentary Section 32 vendor statement review
Pearson Chambers Conveyancing
Email: contact@pearsonchambers.com.au