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Buying or selling in Melbourne can feel like trying to board a packed CBD tram with two bags and a coffee. Everyone says "it's simple" until you are juggling conditions, deadlines and acronyms. The good news is that Victorian contracts follow a fairly standard structure. Learn the core clauses, spot the traps, and your deal is far more likely to glide to settlement without drama.
Below I break down the essentials, with Melbourne specific context and the bits people most often miss.
The 'Must Haves' Every Victorian Contract Should Cover
Particulars of Sale
This section sets out the property details, the parties, the price, the deposit, the settlement period and any conditions such as finance or inspections. Consumer Affairs Victoria recommends agreeing a clear settlement window, usually between 30 and 90 days, and listing inclusions like the dishwasher or that wall mounted TV bracket that causes more arguments than you'd think.
Section 32 Vendor Statement
Strictly speaking this sits alongside the contract, yet it is inseparable in practice. The vendor must disclose key matters about the land before the purchaser signs, including title particulars, easements, planning, services and outgoings. Failure can carry serious consequences. The requirement comes from section 32 of the Sale of Land Act 1962.
General Conditions
Most Victorian sales use the Law Institute of Victoria and REIV standard contract. Its 'general conditions' govern risk, adjustments, notices, default and more. Practitioners widely recognise these provisions, and the LPLC guidance cautions that if you vary them with special conditions, you should amend the warranty that the general conditions are unchanged.
Special Conditions
These sit on top of the general conditions and can strengthen or weaken your position. For example, a seller might include early deposit release or delete parts of the standard finance clause. Always read them line by line.
Cooling Off Rights and Auction Exceptions
In a private sale of residential property or small rural land, you have a cooling off period of three clear business days from the day you sign. If you cool off, you are entitled to a refund less $100 or 0.2 per cent of the price, whichever is greater. There is no cooling off at or within three clear business days of a publicly advertised auction, and several other exceptions apply, including corporate purchasers.
Reality check for Melbourne buyers: Saturday auction culture means many homes sell without any cooling off safety net. If you think you might bid in Brunswick or Bentleigh, have your contract and Section 32 reviewed a few days beforehand.
Deposit, Stakeholder and Early Release
A deposit is paid when you make a written offer or upon signing. If an agent is involved they hold it in trust until settlement, unless the parties agree to an early release. Early release is permitted only when the contract is unconditional, the purchaser is satisfied about the vendor's debts, and 28 days have passed since signing. If that feels like a long wait when you are funding a purchase, that is the point. It protects both sides.
Tip for vendors in suburbs like Preston or Moorabbin where bridging finance is common: if you want the deposit released early, make sure your special condition matches section 27 requirements and your mortgage payout figure is ready to go.
Finance, Inspection and Other Common Conditions
Subject to Finance
Victorian contracts typically include a finance condition giving the purchaser a set period to obtain loan approval from a nominated lender. If approval is not obtained and the correct notice is given, the purchaser can end the contract and recover the deposit. Be careful, because some special conditions make the purchaser's obligations more onerous than the default LIV wording.
Building and Pest Inspection
Popular across Melbourne's period homes in Brunswick, Yarraville or Northcote, an inspection clause lets you walk away or negotiate if a significant structural issue is found. Consumer Affairs recognises inspection clauses as a standard form of conditional offer in private sales.
Sale of Existing Property
Less common in hot markets, but if you need to sell in order to buy, a well drafted condition can be the difference between sleeping well and cold sweats at 3 am. Get your dates lined up with realistic timeframes from your agent and lender.
Title, Encumbrances and What You Actually Buy
The contract and Section 32 should disclose easements, covenants, caveats and any other restrictions that might affect your plans, such as a single dwelling covenant or a sewer easement that rules out your dream studio. LPLC's guidance highlights how often easements and covenants are missed or described inadequately in Section 32s.
If the property is within an owners corporation, the vendor must include an owners corporation certificate and prescribed attachments in the Section 32. That certificate discloses fees, insurance, rules, litigation and more. It must be issued within 10 business days of application and is mandatory for lots affected by an owners corporation.
Melbourne apartment buyers take note: the owners corporation certificate is the single best snapshot of a building's health. Read it for evidence of water ingress, combustible cladding programmes and special levies. If the Section 32 is older than a few months, ask for an updated certificate before settlement.
Vacant Possession or Subject to Lease
Contracts state whether the property is sold with vacant possession or subject to an existing tenancy. The standard form recognises vacant possession unless 'subject to lease' is completed, in which case details of the lease must be provided.
If you are buying to live in, ensure the contract promises vacant possession on settlement. If you are buying an investment in Docklands or Carlton, confirm rent, bond and any rent arrears are adjusted correctly at settlement, and that the tenancy continues on the existing terms.
Risk, Insurance and Damage Before Settlement
Under the standard Victorian position, the vendor generally bears the risk of loss or damage until settlement unless the contract says otherwise. That does not mean a purchaser should ignore insurance entirely. Always check special conditions and, if you get early access, expect the risk to be pushed to you.
Consumer Affairs also makes it clear you are entitled to a final inspection in the week before settlement, and the seller must hand over the property in the same condition as when it was sold. If something is broken that was working at sale, you can request a repair.
Adjustments: Who Pays What at Settlement
At settlement, council rates, water charges, owners corporation levies and rent are apportioned so each party pays for their period of ownership. This is standard Victorian practice and is flagged in Consumer Affairs guidance on settlement.
One major change caught many by surprise. From contracts entered into on or after 1 January 2024, adjusting land tax in most property sales is banned. Clauses attempting to shift a vendor's land tax to the purchaser are void. This reform was introduced by the State Taxation and Other Acts Amendment Act 2023.
Practical example: if you are buying an investment townhouse in Carnegie, expect to adjust rates, water and owners corporation fees. You should not see an adjustment line for the vendor's land tax in a standard post 2023 contract.
GST and Price Wording
Every contract should clearly state whether the price is inclusive or exclusive of GST, and whether the margin scheme applies. Consumer Affairs emphasises that GST applies to most new residential premises and not to established homes unless the seller is registered for GST. The price wording matters because a poorly drafted clause can leave a seller short or a buyer paying more than expected.
For 'new residential' or certain 'potential residential land' purchases, the purchaser must withhold and remit GST to the ATO at settlement. This is the national 'GST at settlement' regime that your conveyancer will manage through PEXA.
Foreign Resident Capital Gains Withholding (If Applicable)
If the vendor is a foreign resident for tax purposes, the purchaser must withhold part of the price and pay it to the ATO, unless the vendor provides a clearance certificate. From early 2025 the rate increased to 15 per cent and the threshold was lowered to $0, broadening when the rules bite. Always confirm the current position before signing.
In practical terms, most Melbourne sellers provide an ATO clearance certificate early in the campaign so the clause never troubles you. Your contract should still include a tidy withholding provision to avoid last minute stress.
Off the Plan and Sunset Clauses
If you are buying off the plan in a development near South Yarra station or out at Burwood Brickworks, read the sunset clause. Since 2019 a vendor cannot rescind a residential off the plan contract under a sunset clause without the purchaser's written consent or a court order. This protects buyers from excessive delay risks.
Check the contract for default interest, defect rectification processes, finishes schedules and any rental guarantee wording. Off the plan contracts can also limit or remove nomination rights, so do not assume you can switch buyers near settlement without tax or duty consequences.
Nomination and 'And/Or Nominee'
Standard Victorian contracts usually permit the purchaser to nominate another person or entity to complete the purchase. The right exists both under the contract and at common law, yet special conditions can restrict timing or documentation. More importantly, nominations can trigger additional duty if there is a sub sale or 'land development' before nomination. Get tailored advice if you plan to buy in your personal name then nominate your company or SMSF.
Reality check: you remain liable if your nominee fails to settle. That is a nasty surprise if you only ever saw 'and/or nominee' scribbled beside your name at a hurried Saturday signing.
Owners Corporation Essentials for Apartments and Townhouses
If the property is affected by an owners corporation, the Section 32 must include a compliant certificate. Consumer Affairs spells this out and also suggests that if a certificate is older, purchasers should ask for a fresh one before settlement or inspect the owners corporation records.
What to look for in inner Melbourne blocks: special levies for facade works, overdue fees, litigation and maintenance plans. Certificates must be produced within 10 business days of application and carry prescribed content under section 151.
Owner Builder Works and Section 137B
If you are selling a home where owner builder work was completed within six years and six months, you must provide a Section 137B defects report in the Section 32. For work over a specified value, domestic building insurance may also be required. This comes from section 137B of the Building Act 1993.
Melbourne reality: a quick kitchen refresh in Thornbury can still count as owner builder work. If 137B applies and the report or insurance is missing, expect delays or leverage for the other side. Consumer Affairs hosts guidance for owner builders and the regulatory requirements are updated periodically.
Electronic Signing and E Settlements
Victoria is an e conveyancing jurisdiction. Settlements are conducted electronically through PEXA or another ELN, with limited exceptions. The Legal Services Board and Commissioner confirms that conveyancing must take place electronically in Victoria, and the Electronic Transactions (Victoria) Act recognises electronic signatures when specific criteria are met.
In practice this means your 'paperwork' for a house in Glen Waverley may be signed on your mobile, and funds and title transfer occur online on settlement day. Your contract should allow electronic notices and execution.
Default, Penalties and What Happens If Things Go Wrong
Nobody likes reading defaults and penalty interest, yet these are the safety rails. Standard contracts set out notice requirements, interest on late settlement and the process for rescission. Industry commentary notes the default interest rate is often set by the contract and can be steep, which is why timeframes must match your lender's turnaround.
If Melbourne's banks are busy and your approval has not landed, do not assume you can 'wing it'. Ask well ahead for an extension or vary the condition before you sign. A short, clear special condition is cheaper than penalty interest.
GST, Stamp Duty and Other Government Charges in the Contract
Apart from GST clauses, your contract will reference the purchaser's obligations to pay Victorian duty to the SRO. Duty is not a clause to negotiate in the contract, yet it affects cash flow and timing. Consumer Affairs' settlement guidance reminds buyers that duty is part of the process and must be budgeted for. For 'new residential' purchases, remember the separate GST withholding obligation outlined above.
Melbourne Specific Tips That Save Headaches
List inclusions and exclusions carefully. If it is not listed, assume it is not included. Built in sound systems, outdoor heaters, even the humble clothesline in an inner north terrace can cause friction. Consumer Affairs specifically warns that unlisted items are hard to claim at settlement.
Match your timeframes to the market. Campaigns in family suburbs like Werribee or Blackburn often run on 60 or 90 day settlements. Apartments near the CBD sometimes settle in 30 days, although lenders may still need longer for final approvals. Consumer Affairs cites 30 to 90 days as the usual range.
Never ignore the owners corporation certificate. Apart from fees and insurance, it reveals looming issues that may dwarf the price haggles. It is compulsory in affected sales.
Do your final inspection. You are entitled to it and it protects you if the property is not in the same condition.
A Quick Checklist of Essential Clauses to Confirm Before You Sign
- Particulars of sale with correct names, price, deposit, settlement period, inclusions and any tenancies
- Cooling off awareness for private sales and auction exceptions
- Finance condition with realistic approval date and no hidden hurdles in special conditions
- Deposit release (s 27) only if contract is unconditional, proof of debts is satisfactory, and 28 days have passed
- Section 32 complete and up to date, including an owners corporation certificate where applicable
- GST wording clear and, for new residential or potential residential land, GST at settlement withholding addressed
- Foreign resident withholding addressed with a clearance certificate or withholding clause aligned with current law
- Adjustments for rates, water and owners corporation fees, and no land tax adjustment in standard post 2023 sales
- Risk and insurance position unchanged unless you agree otherwise
- Nomination rights understood, with duty and timing risks considered
- Owner builder 137B report and insurance provided where required
How It Plays Out on the Ground in Melbourne
You spot a cosy weatherboard in Reservoir. The agent emails the contract and Section 32 on Wednesday, with an auction set for Saturday. You book a quick review. We check the title and discover an easement that nixes your planned rear extension, the owners corporation certificate for your dream Fitzroy apartment shows a special levy for facade rectification, and the contract's special conditions attempt an early deposit release that is premature. In other words, nothing a calm, methodical approach cannot fix.
We ask the vendor's solicitor to update the certificate, tidy the early release clause to mirror section 27, and clarify GST wording because the property is a new build. We also adjust the finance condition to a realistic 21 days because your bank's turnaround looks closer to three weeks than two. If you buy privately rather than at auction, you still have cooling off as a backstop unless an exception applies.
Final Thoughts
Contracts are there to allocate risk clearly. When each essential clause is clear and current, the rest of the journey is much less stressful. If a clause feels vague, it probably is. If a date seems optimistic, it probably is. There is no prize for being the bravest person at signing if the wording leaves you exposed later.
Need a Second Set of Eyes?
If you are about to buy or sell anywhere in Melbourne, from St Kilda to Sunbury, we are happy to help. Pearson Chambers Conveyancing offers a complimentary Section 32 contract review and practical advice tailored to your deal. Email contact@pearsonchambers.com.au today.