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You can do a dozen Saturday opens, watch the auctioneer pace the footpath, and still miss the thing that costs you most: a problem that isn’t obvious on inspection day.
In Victoria, some debts and obligations are tied to the land or the lot, not the person who owned it yesterday. Once your name goes on title, you may be the one dealing with the council, the owners corporation, or a notice that’s already been issued.
This isn’t about scaring buyers. It’s about knowing where the hidden traps tend to sit in Melbourne purchases, and how a careful contract review and the right searches can keep your ‘dream place’ from turning into an expensive clean up job.
What ‘liabilities that transfer’ really means
When people say a liability ‘transfers’, they usually mean one of three things:
It’s a charge or restriction that stays on the title (think easements and certain statutory charges).
It’s a notice or order that applies to the land (a building order, planning enforcement, or a council notice).
It’s an unpaid outgoing that the relevant authority will chase from the current owner if it isn’t cleared as part of settlement.
A normal home buyer’s job is not to become a part time investigator. That’s what the conveyancing process is for. The trick is making sure the contract, the disclosures, and the searches are all doing their job before you sign.
The documents that are meant to tell you, and what they can miss
For most Victorian sales, the seller provides a vendor statement under section 32. You’ll often hear it called the Section 32 vendor statement. It’s a key starting point, yet it isn’t a full history of the property and it’s only as good as the information supplied and attached.
A solid review looks for what’s there, what’s missing, and what needs a follow up search or a special condition. That’s why buyers often seek professional conveyancing help before an auction or cooling off deadline, not after.
Outgoings that can land on your desk after settlement
Council rates, charges and special levies
Council rates are the classic example. In a standard Victorian settlement, rates are adjusted so the seller pays up to settlement and you pay from settlement onwards. If there are arrears, your conveyancer will usually factor them into the adjustments so they’re paid out at settlement.
Problems start when the figures aren’t checked properly, the certificate is out of date, or the contract is rushed and no one is watching the detail. Councils tend to pursue the registered owner, so if something is left unpaid, you may be the person the letter lands with, even if the debt started years earlier.
This comes up in everyday Melbourne sales. Think of a weatherboard in Coburg with a long list of ‘special charges’ for local works, or an older block in St Kilda where the property has changed hands quickly and the paperwork is a mess.
Water and sewerage charges
Water corporations generally treat the owner as responsible for service charges, with usage handled through adjustments and, where relevant, tenant arrangements. In practice, this means the settlement statement matters. If there’s a balance outstanding and it isn’t dealt with at settlement, you don’t want to be the person sorting it out later.
Land tax charges on investment property
Most owner occupiers won’t pay land tax on their principal place of residence. Investors and owners of non exempt land are a different story. Unpaid land tax can be secured as a charge on the land, which means it can outlive the seller’s ownership.
This is one of those issues that feels ‘too boring to be dangerous’ until it isn’t. It’s also why a property clearance certificate and careful settlement adjustments matter, even when the property looks straightforward.
Owners corporation debts and ‘special levy’ surprises
If you’re buying an apartment in Southbank or a townhouse in Brunswick East, an owners corporation sits in the background like the building’s shared rulebook and bank account. The owners corporation can levy annual fees and extraordinary fees to pay for insurance, maintenance, legal costs, lifts, cladding projects, or major repairs.
Two things catch buyers out:
Arrears and recovery action. If the current lot owner hasn’t paid fees, the owners corporation will still want its money. The contract package should include an owners corporation certificate and other information, yet it’s still worth checking the numbers against meeting minutes and recent correspondence.
A levy that’s been decided but not yet billed. A committee can vote for major works, then the invoice arrives weeks later. If settlement occurs in that gap, the question becomes: who pays?
A well drafted special condition can deal with this by requiring disclosure of proposed levies, setting a cut off date, or adjusting the price where appropriate. Without it, you may end up funding yesterday’s decision.
Building notices, building orders and unapproved works
Melbourne buyers love a renovation. A fresh kitchen in a Northcote townhouse, an extended deck in Footscray, a loft conversion tucked under the roofline of a Richmond terrace.
The risk is that the work looks good but isn’t compliant, or approvals were never finalised. Councils and building surveyors can issue notices and orders that require work to be fixed, removed, or made safe. Some orders are drafted to bind future owners.
That can mean:
paying for reports and engineering certificates after you’ve moved in
removing structures that were never approved
dealing with a stop work or ‘show cause’ process if you were planning your own extension
A standard building inspection won’t tell you what’s sitting in a council file. The right searches and a careful read of the contract documents are what flush this out early.
Planning issues that follow the land
Planning problems aren’t always dramatic. Sometimes it’s a permit with conditions and deadlines that a seller never completed. Sometimes it’s a use that never matched the permit.
Common Melbourne examples include:
a backyard studio used as accommodation without the right approvals
a subdivided block where conditions about drainage or access were never satisfied
a development permit that requires a contribution or specific works within a set time
If you inherit the property and the deadlines are already running, you may be stuck scrambling to comply.
Title restrictions that can become ‘liabilities’ in real life
Not every headache is a debt. Some of the most expensive surprises are restrictions that limit what you can do with the property.
Easements
Easements are common in older suburbs and new estates alike. A drainage easement can stop you building where you planned, even if the agent said the block was ‘perfect for an extension’. A sewer easement can mean extra approvals and costs for any works nearby.
Covenants and other encumbrances
A covenant can control materials, building size, use, or even the position of a dwelling. Buyers often discover this when they’re planning a second storey, a subdivision, or a new driveway crossover. Your contract should disclose these restrictions, yet they’re still easy to skim past when you’re under pressure.
If you’re dealing with restrictive covenants, you’ll want to understand what’s on title and what options exist before you commit.
Owners corporation rules
Even before you get to fees, rules matter. Pets, short stay letting, balcony use, renovations, floor coverings, storage cages and car stackers, all can be controlled by rules that apply to every lot owner. If you’re buying with a plan in mind, it’s worth checking whether the plan fits the rules.
Contamination and land use history
Most home buyers aren’t purchasing an old factory site, yet Melbourne’s history means odd pockets of risk can pop up in places you wouldn’t expect, especially around former industrial corridors.
Contaminated soil and groundwater issues can affect renovations, extensions, and future redevelopment. Regulators can require action where there’s a risk of harm, and owners and occupiers can have duties to manage that risk.
In practical terms, pay closer attention if the property:
is a former service station or workshop site
sits near historic industrial uses
has unexplained fill, staining, or an odd chemical smell around sheds or under concrete slabs
is being bought for a change of use or a significant redevelopment
For most standard home purchases, a sensible level of checking is enough. For commercial land or sites with a clear history, you may need specialist reports as part of due diligence.
Heritage overlays and other controls that change the cost of ‘simple’ renovations
A pretty cottage in Carlton or a terrace in Fitzroy can come with planning controls that make ‘just repaint it and add a deck’ far from simple. Heritage overlays can affect materials, colours, demolition, windows, fences, and even what you can do at the back of the property.
This isn’t a dealbreaker. It’s a budgeting and timing issue. If you buy without understanding the controls, you risk paying for redesigns, extra reports, and long delays before you can start.
What to do before you sign, even if you’re buying at auction
Auction contracts in Melbourne move fast. You might get the paperwork on Thursday, inspect on Saturday, then bid that afternoon. If that’s your world, your protections come from preparation.
Here’s what a careful buyer does:
Get the contract reviewed early. Waiting until the morning of the auction is when mistakes slip in.
Check the key certificates and disclosures. Title, planning details, rates and charges, owners corporation information for units, and anything that looks incomplete.
Ask for follow up searches where the risk is higher. Council building files, planning history, and land tax clearance checks can matter more than people expect.
Look for special conditions that limit your ability to protect yourself. Some contracts try to stop a buyer from deducting amounts at settlement to clear certain debts. These clauses deserve close attention.
Treat ‘newly renovated’ as a prompt to ask for approvals. Don’t assume a stylish finish equals compliant work.
Read owners corporation minutes like you mean it. Talk of ‘major works’, ‘legal action’, ‘quotes’, ‘defects’, or ‘insurance issues’ is a cue to ask more questions.
A quick Melbourne reality check
Hidden liabilities rarely announce themselves at the inspection.
They show up later, after the excitement has worn off, when:
the council letter is addressed to ‘Owner’
the owners corporation raises a levy because the roof has failed
you apply for a permit and learn the previous permit conditions were never met
your builder points out the deck posts aren’t to standard and you need engineering sign off
Most of these problems are preventable. The earlier you review the contract, the more options you have to negotiate, walk away, or build the real cost into your decision.
Want peace of mind before you commit?
If you’re buying in Melbourne or regional Victoria and you’re worried about hidden liabilities, we can take a careful look at the contract and the vendor documents, flag the red flags, and explain your options in plain language.
Email contact@pearsonchambers.com.au to arrange a complimentary Section 32 contract review.
This information is general in nature and isn’t legal advice. For advice that fits your situation, please get in touch with our team.