Illegal Building Works and Section 32 in Victoria

By the Pearson Chambers Conveyancing.
Published April 23rd 2026

We get asked this all the time by Melbourne buyers who’ve just walked through a place with a brand new deck, a fresh rear extension, or a garage that now looks suspiciously like a bedroom. The home feels right, the campaign is moving fast, and then the paperwork doesn’t quite match what you can see.

The short answer: In Victoria, a Section 32 must disclose building permits issued in the previous seven years where there is a residence on the land. If recent works look obvious but the permit trail is missing, a buyer may be able to rely on section 32K before settlement to pull out, renegotiate, or insist on better evidence of compliance. If the work was owner-builder work, extra documents may also be needed, including a current defects report and, where required, domestic building insurance.

Why do Melbourne homes so often end up with illegal building works?

Because Melbourne is a renovation city, and paperwork doesn’t always keep pace with the building. A weatherboard in Yarraville gets a back deck. A brick veneer in Reservoir gets the garage lined, carpeted and fitted with downlights. A townhouse in Preston gets a pergola that slowly becomes something much bigger than a shade structure.

Some owners know exactly what approvals they needed and got them. Others relied on loose advice, did bits of the work over time, or assumed that because the job looked minor, no permit was needed. By the time the property hits the market, the works can look settled and permanent, while the Section 32 says very little.

That is where buyers get caught. A polished renovation can feel reassuring at an inspection. The risk usually sits in the missing paper trail, not in the paint colour or the nice staging.

What must a Section 32 disclose about building works?

A Section 32 is meant to tell a buyer what materially affects the land before they sign. That includes title matters, outgoings, notices, owners corporation material where relevant, and building permit history for recent works. It also sits alongside the broader duty to disclose material facts that could influence a buyer’s decision.

For illegal building works, the key starting point is the seven-year permit history. If there is a residence on the land, the vendor statement should include particulars of any building permit issued under the Building Act for the preceding seven years. In plain English, if the seller added a rear extension, major deck, carport, studio or other permit-based work in that period, the Section 32 should not be silent about it.

That is only part of the picture. A permit shows approval to start, not proof that the job was properly finished. Final sign-off matters as well. In Victoria, the end of the permit process is usually the Certificate of Final Inspection or an Occupancy Permit. If you can see recent work but there is no permit disclosure, or there is a permit without final sign-off, that deserves a much closer look.

Owner-builder work needs extra care. If the seller did domestic building work as an owner-builder and sells within the statutory window, there can be added requirements around warranties, a defects report and insurance. That is one reason recent DIY-style upgrades can be more legally awkward than buyers first expect.

Can I rescind if recent works are missing from the Section 32?

Yes, sometimes you can. Section 32K can give a buyer a right to rescind the contract before settlement where the vendor statement was not properly given, or required information was not supplied.

That right is powerful, but it is not something to wave around lightly. You need to move before settlement, and the facts still matter. A tiny clerical slip is not the same as a clearly visible extension with no matching disclosure. Timing matters too. Once you accept title or become entitled to possession, the rescission window is generally gone.

The practical lesson is simple. If something looks off, raise it fast. Don’t leave it until the final inspection when removalists are booked and finance is already lined up.

We’ve had clients come to us after a Saturday inspection in Brunswick or Pascoe Vale saying, ‘the back room looks newer than the rest of the house, but there’s nothing about it in the Section 32’. That instinct is often the right one. When the visible works and the paperwork are telling different stories, that is not something to brush past.

What kinds of building work problems do buyers usually uncover?

Most issues fall into four buckets.

Work that probably needed a permit and never got one

This is the classic problem. Think a carport beside a 1960s house in Box Hill, a large timber deck in Coburg, or a garage conversion in Preston that now reads like a home office or extra bedroom. If the works are recent and there is no permit trail in the Section 32, the buyer needs to pause.

Work that has a permit, but no proper finish

This one is more common than buyers realise. There may be a permit number in the vendor statement, but no clear sign that final inspections happened or that the work was signed off. That can leave the new owner holding a half-finished compliance problem.

Work already tied up in a council notice or order

If council or the municipal building surveyor has already stepped in, the issue is no longer theoretical. A building notice or order can require further information, rectification, or even demolition. The stress point here is obvious: the property keeps moving through the market while the compliance problem stays attached to the land.

Older work outside the seven-year disclosure window

This is where buyers can feel unfairly blindsided. The Section 32 disclosure rule is tied to recent permits, but older unapproved work can still matter. A bungalow, enclosed veranda or old extension from years ago may sit outside the seven-year disclosure period and still create risk if council later takes an interest or if the structure turns out to be unsafe.

What does your conveyancer check before you sign?

A good conveyancer checks what is missing, not just what is attached. That means reading the Section 32 against the real property, not in isolation.

At Pearson Chambers, we start by matching the visible works to the disclosure. If the home has a fresh ensuite, widened rear living area, new roofline, raised deck, converted garage or separate studio, we ask a simple question: where is the permit trail for that work?

Then we look for the finish of the process, not only the beginning. If permits are disclosed, we want the Certificate of Final Inspection or Occupancy Permit for the completed works where that should exist. A permit on its own does not tell you that the job passed the required stages and was closed out properly.

We also look harder at owner-builder jobs. Recent owner-builder work can call for a defects report that is less than six months old at the time of sale, plus insurance where the law requires it. If those documents should be there and are not, the risk is not theoretical. It can affect the buyer’s rights, the buyer’s comfort level, and the deal itself.

A practical next step is to ask your conveyancer whether council building records should be checked for the property. That can help confirm whether the recent deck, extension or conversion you saw at inspection lines up with what has actually been recorded.

What can you do if permits or final sign-off are missing?

You do not always need to kill the deal. But you do need a plan before you sign, or before settlement if the issue is discovered late.

A sensible response usually sits in one of these lanes:

Walk away before you are locked in.
If the missing works are major, recent, and the vendor cannot produce a reliable explanation, ending the deal may be the cleanest path.
Negotiate a price reduction.
This can make sense where the buyer still wants the property but needs to budget for fresh advice, possible rectification, and the risk of later compliance work.
Require the seller to produce more documents.
Sometimes the paperwork exists and was simply left out. A permit, final inspection document, defects report or insurance certificate can change the picture quickly.
Add a special condition before signing.
The contract can be shaped so the seller must provide named building documents, or deal with a specific compliance issue, before settlement can go ahead.
Hold part of the money back at settlement.
In some matters, a retention arrangement can protect the buyer while outstanding building compliance steps are sorted out.

The right choice depends on the scale of the works and how much uncertainty remains. A small pergola issue is one thing. A rear extension, converted garage, or second-storey addition is another.

Can illegal building works affect your loan and insurance?

Yes, and this catches buyers out. The legal risk is only one part of the story.

A lender’s valuer may query work that appears unapproved or unfinished from a compliance point of view. If that happens late in the transaction, loan approval can wobble right when settlement is close. That is especially painful in Melbourne campaigns where buyers have already lined up notice periods, trades, cleaners and moving trucks.

Insurance can also become messy. If the structure at the centre of the claim is unapproved, you may face questions you would rather not be dealing with after a storm, fire or water event. That does not mean every policy will fail, but it does mean buyers should not assume the issue ends once the keys are handed over.

There is also the post-settlement angle. Statutory building warranties can run for years after work is completed, and recent building problems may still trigger disputes after purchase. A buyer who thought they were only taking on a documentation gap may discover they have also inherited a workmanship problem.

Frequently asked questions

What counts as illegal building works in Victoria?
Illegal building works usually means work that needed a building permit but did not get one, or work that started with a permit and was not completed in line with that approval. It does not always mean the owner acted deliberately. It means the work may not have the compliance trail the law expects.

Can I rescind my contract if the Section 32 doesn’t disclose illegal building works?
You may be able to, particularly if recent permit-based works should have been disclosed and were not. In Victoria, section 32K can allow a buyer to unwind the contract before settlement in some defective disclosure cases. The safest move is to get your conveyancer involved as soon as the issue appears.

How do I check if there are illegal building works on a property?
Start by comparing the visible works with the Section 32 and contract documents. Then ask your conveyancer whether council building records, permit history, owner-builder documents, or final inspection records should be obtained for the address. A pre-purchase building inspection can also help spot works that look newer or more structural than the paperwork suggests.

What happens if the council issues a building order after I buy?
That can become your problem as the current owner. Depending on the order, you may need to provide documents, carry out rectification, stop using part of the building, or in serious cases remove non-compliant work. The costs can be substantial, which is why this issue is far better dealt with before settlement.

Do older illegal building works still matter if they’re outside the seven-year Section 32 window?
Yes, they can still matter. The seven-year rule affects disclosure, not whether old work can create risk later. Older unapproved works may still raise safety, valuation, insurance, resale or council compliance issues, even if the current Section 32 is not defective for that reason alone.

About the Pearson Chambers Conveyancing team

We’re Melbourne conveyancers working with buyers and sellers across the city every day, from first-home buyers chasing an inner north terrace to families upsizing in the east and west. Section 32 reviews are a core part of our day-to-day, because this is often where the real story of a property starts to show. Questions about illegal building works, permits and missing sign-off are exactly the kinds of issues our team deals with before clients commit.

Sources we consulted

Get your Section 32 reviewed before you sign

If you’re looking at a Melbourne property with a fresh renovation and the paperwork feels thin, don’t guess your way through it. We offer a complimentary Section 32 contract review for buyers who want a clearer read on the risks before they commit.

Email: contact@pearsonchambers.com.au