In Victoria, the principle of caveat emptor (“buyer beware”) generally applies to real estate transactions. Unless s 137B of the Building Act 1993 (Vic) applies, purchasers must conduct thorough inquiries before signing a contract. Vendors do not assume liability for defects in buildings or land, even if those defects make the property dangerous or unfit for occupation. This applies regardless of whether the vendor caused or knew about the defects, as long as there is no fraudulent concealment, misrepresentation, or express agreement otherwise.
“Joint Tenancy” means that property is held in equal shares by all joint owners. However, property owners might sometimes choose to sever this joint ownership for reasons such as:
Under s 72 of the Property Law Act 1958 (Vic), a a joint owner can legally sever a joint tenancy by transferring their interest to themselves. This action converts the joint tenancy into a tenancy in common. It’s important to note that before this change in ownership can be officially recognised, the duplicate certificate of title must be submitted to the Land Registry.
Q: I represent a purchaser who signed a contract seven days ago, but the vendor has not yet signed. Can my client still cool off and withdraw the offer?
A: Yes, under certain conditions. In Victoria, purchasers typically have three clear business days to cool off. However, because the vendor has not yet signed the contract, and your client knows this, your client can withdraw the offer to purchase the property. Since the vendor has not accepted the offer, the contract remains non-binding, allowing your client to withdraw without penalty.
Q: My client discovered that the vendor removed curtains included in the contract during a pre-settlement inspection. Can we deduct the replacement cost from the settlement money?
A: No, you cannot deduct the estimated cost of replacement from the settlement funds. The LIV General Conditions require the vendor to deliver the property and included goods/chattels in the same condition as when the contract was signed, except for fair wear and tear. However, this does not give the purchaser the right to make deductions at settlement. Instead, if any goods or chattels are not in the required condition, the purchaser may claim compensation from the vendor after settlement. The process for claiming compensation is detailed in General Conditions of the LIV Contract of Sale.
Q: My client discovered substantial rubbish on the property during a pre-settlement inspection. Is the vendor obligated to remove it?
A: Rubbish is annoying and dirty, but the vendor is generally not required to remove rubbish from the property, unless there is a specific condition in the contract stating otherwise. If the rubbish was present on the property as of the day of sale, the vendor has no obligation to remove it. This situation is surprisingly common, and unless addressed by a special condition in the contract, the purchaser may need to handle the removal themselves.
Q: We represent a purchaser of real estate, and the vendor is a company. A company search revealed a fixed and floating charge over the vendor. The vendor’s solicitor has refused to provide a Form 312. Can we insist on the vendor providing this form, and can we adjust the ASIC fee against the vendor?
A: Yes, the purchaser can insist on the vendor providing a Form 312, but specific conditions apply. According to General Conditions of the LIV Contract of Sale, the vendor must provide a Form 312 at settlement if it has been requested in writing at least 21 days before settlement. However, this obligation does not apply if the chargee is the proprietor of a registered mortgage over the land. The vendor is also responsible for paying the registration fee for the Form 312.
Q: I represent a vendor who recently sold her house. The estate agent did not list the refrigerator under “goods” in the Particulars of Sale. A dispute has now arisen because the vendor removed the refrigerator, which was built-in and connected to water inlets and outlets. The purchasers’ solicitor wants to withhold money at settlement. Is the refrigerator a fixture or a chattel?
A: Determining whether a built-in refrigerator is a fixture or a chattel requires an analysis based on common law tests. Practitioners should consider the degree of annexation and the intention of annexation to make this determination:
Given these factors, the refrigerator in question is likely to be considered a fixture, which means it should have remained with the property unless explicitly excluded from the sale. However, this situation often requires further legal interpretation and possibly negotiation between the parties involved.
Q: During the course of a contract, the vendor requested that the purchaser settle one week earlier than the original settlement date. The purchaser agreed, and an appointment was made for the earlier date. However, the purchaser was unable to settle on the agreed early date but managed to settle before the original settlement date. Is the purchaser required to pay penalty interest?
A: Yes, the purchaser is obliged to pay penalty interest. When both parties agree to an earlier or later settlement date—whether the agreement is confirmed in writing or orally—that new date becomes the official settlement date. Failure to settle on the agreed date constitutes a breach of contract, triggering the obligation to pay penalty interest as specified in the contract.
Yes, if adjustments are effected in error.
Yes, adjustments should be as at the day of settlement.
Simple rule – treat it as a part-payment and remember that the vendor must receive the ultimate benefit. General Condition 15.2(d), 2008 Contract.
Usually adjustment should be based on proportion by area.
Suggest that the vendor pay the rates in full at the first settlement and provide proof of payment at subsequent settlements.
Yes, although this may be unfair to your clients. Obviously in future years the principal residence exemption will apply to your clients and they will not be required to pay land tax. General Conditions 15.1 and 15.2(b) of the 2008 Contract apply
The vendor is entitled to the rent which accrues on the day of settlement. General Condition 15.2(a), 2008 Contract.
No. The vendor is liable for the periodic outgoings up to and including the day of settlement. General Condition 15.2(a), 2008 Contract.
SOURCE: Law Institute of Victoria
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