What is General Condition of Contract?

Buying or selling property is one of the biggest financial decisions most Melburnians will make. At the heart of every transaction sits the Contract of Sale, a stack of pages that can look alarmingly legalistic. The first part of that contract, and the part lawyers pore over first, is a set of rules called the General Conditions. There are 35 of them in the standard form produced jointly by the Law Institute of Victoria (LIV) and the Real Estate Institute of Victoria (REIV). They govern everything from how the deposit is handled to what happens if the house burns down the night before settlement.

In this article we unpack what the General Conditions are, why they matter, and how they interact with the Section 32 Vendor Statement that must accompany every Victorian property sale. By the end you will know which clauses deserve special attention, the traps to avoid, and where to turn for help if you want a professional eye on your paperwork.

What Are General Conditions in a Victorian Contract of Sale?

Every contract has two layers:

General Conditions – the boiler-plate rules that apply to all residential property sales using the LIV/REIV template.

Special Conditions – extra clauses added to suit a particular deal (for example an early access arrangement or a longer settlement).

Think of the General Conditions as the road rules of conveyancing. They apply automatically unless a Special Condition changes them. Because most buyers sign at auction or under time pressure, these clauses often become binding before anyone has paused to read them.

Why Melbourne Property Buyers and Sellers Should Care About General Conditions

The General Conditions allocate risk between the parties. They say who pays what if rates are unpaid at settlement, who carries the risk of damage before the handover of keys, how interest is calculated if settlement is delayed, and the exact steps required to serve notices. If you misunderstand a clause you may lose your deposit or face penalty interest of up to 10 percent per annum.

Victoria's property market moves quickly, and contracts are commonly exchanged digitally. General Condition 1 confirms that electronic signatures are valid, so the moment you click "Sign" the clock starts on cooling-off rights, finance conditions and more.

How General Conditions Link to the Section 32 Statement

Under the Sale of Land Act 1962 the vendor must give a prospective purchaser a Section 32 statement (often just called a "Vendor Statement") before any contract is signed. The statement discloses title details, zoning, easements, outgoings and other matters that might influence a buyer's decision. If the Section 32 is incomplete or inaccurate, the buyer can rescind or even sue for loss.

Several General Conditions back up these statutory rights. For example, General Condition 6 (Vendor Warranties) promises that services such as water and electricity are connected and that the vendor has complied with building laws. Breaching those warranties can give the purchaser a right to compensation or rescission, in addition to the remedies under the Sale of Land Act.

The 35 General Conditions Overview

The full list runs for many pages, but the clauses group neatly into themes:

Parties and Signatures (Conditions 1-3)

Electronic Signing
Liability of Signatory
Guarantee Covers who is bound and how

The Land (Conditions 5-8)

Encumbrances
Identity
Services Covers title issues, easements, utilities

Money Matters (Conditions 14, 19-20)

Deposit
GST
Loan Covers how and when money changes hands

Timing (Conditions 17, 26)

Settlement
Time & Cooperation Covers deadlines and extensions

Risk and Inspection (Conditions 21-22, 31)

Building Report
Pest Report
Loss or Damage Covers condition of the property

Default and Enforcement (Conditions 32, 34-35)

Breach
Default Notice
Default Not Remedied Covers penalties, termination rights

You do not need to memorise them, but you do need to know where each clause sits so you can flip straight to it when an agent rings asking for changes.

Five Critical General Conditions Every Victorian Buyer Must Read

Condition 14 – Deposit

It states where the deposit must be held (trust account) and when it can be released. A rushed release can rob you of leverage if the building inspection later reveals major defects.

Condition 20 – Loan (Finance Clause)

Commonly called the "finance clause". It gives buyers a set number of days to secure unconditional approval. Missing the deadline means unconditional contract.

Condition 17 – Settlement

Settlement is usually 30, 60 or 90 days in Melbourne. This clause locks in the date and explains the adjustments for council rates and water usage.

Condition 28 – Notices

It prescribes exactly how parties must give formal notices (email, hand delivery, registered post). Using the wrong method can make a notice invalid, which is critical when issuing a default notice.

Condition 33 – Interest

If settlement is delayed for any reason attributable to you, penalty interest starts accruing daily. On a million dollar purchase it can add hundreds of dollars per day.

Special Conditions vs General Conditions: What You Need to Know

Agents or developers often attach pages of Special Conditions drafted by their lawyer. A Special Condition overrides a conflicting General Condition, so one line can wipe out a protection you thought you had. Common examples include clauses that:

Cap the purchaser's compensation rights to a few hundred dollars
Allow the vendor to extend settlement unilaterally
Pass on land tax even though recent legislative changes prohibit this for properties under $10.4 million

Never assume the standard protections remain intact once Specials are added. That is where professional contract reviews earn their keep.

What Happens When Something Goes Wrong

Breaches are handled in a two-step process:

Default Notice (Condition 34) – the innocent party serves a notice giving at least 14 days to fix the problem
Default Not Remedied (Condition 35) – if the breach continues, the innocent party can end the contract and claim damages or keep the deposit

Because the wording and timing of notices are strict, many disputes hinge on whether the notice complied with Condition 28. One wrong email address and the clock never starts.

General Conditions Beyond Property: Construction Contracts

The term "general conditions" is not unique to real estate. Standards Australia publishes AS 4000, a standard set of General Conditions for construction contracts that allocate risk on major building projects. The 2025 update aims to modernise clauses after 25 years of legislative change, while deliberately keeping the risk balance familiar to contractors and principals.

Although the subject matter is different, the philosophy is the same: general conditions create a predictable, balanced framework so parties can focus on price and scope rather than reinventing the wheel with every deal.

Essential Tips for Melbourne Property Buyers and Sellers

Before You Buy or Sell

Read before you bid – ask for the contract and Section 32 before attending an auction. You have no cooling off period if you buy under the hammer
Check Special Conditions for surprises such as early release of the deposit or additional penalties
Confirm finance time-frames match your lender's turnaround. Melbourne banks often need more than 14 days to convert pre-approval to full approval

During the Process

Budget for adjusted outgoings – council rates, owners' corporation fees and water usage are pro-rated to settlement day
Use licensed professionals – Consumer Affairs Victoria recommends engaging a conveyancer or solicitor to prepare or review your documentation, giving you the protection of professional indemnity insurance
Do a final inspection the day before settlement to ensure the property is in the same condition promised

Key Takeaways for Victorian Property Transactions

The General Conditions are the backbone of every Victorian Contract of Sale
They set out 35 rules covering signatures, title, money, timing, risk and default
A Section 32 statement must accompany the contract and links closely to several General Conditions
Special Conditions can override the standard protections, so always compare them line by line
Professional advice is inexpensive insurance compared with the cost of a botched contract

Get Professional Help with Your Victorian Property Contract

If you are about to buy or sell in Melbourne and want complete peace of mind, let the team at Pearson Chambers Conveyancing review your contract and Section 32 before you sign. Our experienced solicitors will explain every General Condition in plain English and highlight any Special Condition that could cost you later.

Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au