Last updated December 2015
This factsheet is for people whose property has been affected by a disaster or who were buying or selling property during a disaster. It explains your legal rights and options, and has the contact details of helpful organisations.
I signed a contract to buy a property but it was then destroyed or damaged. Can I withdraw from the contract?
A cooling-off period of three clear business days applies to private sales of residential and small rural property sales regardless of price. You ‘cool-off’ by providing written notice to the seller or to their estate agent. You will be entitled to a full refund of money paid, less $100 or 0.2 percent of the purchase price, whichever is greater.
The cooling-off period does not apply when:
- the property was purchased at a public auction or within three clear business days before or after a public auction
- the property is used mainly for industrial or commercial purposes
- the property is more than 20 hectares and used primarily for farming
- you previously signed a contract for the same property in substantially the same terms
- the buyer is an estate agent or corporate body.
If you are unable to terminate the contract within the cooling- off period, you may still have a right to end the contract of sale. You may also have a right to get back all of your deposit, but only if the house is destroyed or damaged so much that it is unfit for you to live in.
Get urgent advice from a lawyer or a conveyancer about this.
I paid a deposit on a house before a fire. The house has burnt down or was damaged by the fire. What can I do?
Ending the contract
If before settlement your residential house was destroyed or damaged so much that you cannot live there, you may want to end the contract and get out of the sale. You need to give notice in writing. Do this before:
(i) becoming entitled to possession or
(ii) to the receipts of rents and profits.
You must give this written notice to the seller (or their lawyer/ or conveyancer) within 14 days after you become aware of the destruction or damage to the house. The seller must also give you back any money you had paid them.
If the seller had a policy of insurance covering the dwelling, there are some circumstances that would entitle the purchaser to the benefits of the seller’s policy of insurance. You can also make a claim with your own insurance company if you have purchased cover.
There are a lot of decisions to be made if you want to end a contract. Get urgent advice from a lawyer or a conveyancer.
Continuing with the purchase
The contract of sale of real estate must be carefully read.
Generally, if the property is slightly damaged (fair wear and tear excepted) you may have no choice but to proceed to settlement. It is up to the seller to fix and pay for any damage that needs to be repaired. You have the right to ask the seller to repair the house so it is restored to the way it was when the contract was signed, as is generally required under the contract of sale. If the damage is not repaired you may only be entitled to compensation. Seek advice from your lawyer or conveyancer on whether you can delay settlement until the repairs are done or seek compensation.
If the seller had a policy of insurance covering the dwelling, there are some circumstances that would entitle the purchaser the benefits of the seller’s policy of insurance. You can also make a claim with your own insurance company if you have purchased cover.
My property was burnt down or damaged and I have now got an offer for it. What should I do?
If you are approached to sell your property, regardless of whether your house has been damaged or destroyed, take your time to consider the offer.
Talk to other people in your local area about the amount of the offer and to experts such as estate agents, accredited property valuers, conveyancers and lawyers.
Have a good think about your overall financial position before accepting any offer. Contact Consumer Affairs Victoria (see ‘Where to get help’ below), if you think that you have accepted an unfair offer.
I want to sell or rebuild a jointly-owned property that was affected by a disaster. The other owner does not want to sell. What can we do?
If you are one of two owners and you want to do anything with your jointly-owned land (for example, lease, sell, repair or renovate), you and the other owner both need to agree to it. Check first to see if you made any agreement with the other owner about how to divide property as this may address the issue.
If you cannot agree to the sale of the property or its physical division, you may need to apply to the Victorian Civil and Administrative Tribunal (VCAT) for an order. VCAT runs more informally than a court. It can help resolve your dispute, make decisions that must be obeyed and order damages to be paid.
VCAT has the power to allow you to sell the property, and then you can split the proceeds with the other owner. VCAT does not usually allow for the physical division of the land.
Your mortgagee/lender might also get involved and want to have a say in how the insurance money is spent.
My destroyed property was used as security for the loan on another property I bought. What happens now?
A property which has been used as security for a loan acts as a protection for the lender if you default (miss repayments) on the loan. If the property was damaged, you still need to make regular loan repayments. Usually you need to tell the lender as soon as possible about any damage to the property that was being used as security.
In most cases, the lender has standard expectations for the property being used as security, such as requiring that you have insurance on the property. If the property is damaged or destroyed, the lender may require that you pay them any insurance money you get. After this happens, you and the lender will have to work together to use that money for repairs, replacements and rebuilding. You can expect that the lender will take control of any negotiations with the insurer. Not all arrangements work like this though. Check the terms of your mortgage document.
If the destroyed property was not insured, the lender could require you to give more security or repay the loan. They may also want the loan paid in full or in part.
My property was destroyed. I owe tradespeople money for work on the property. Do I have to pay?
Yes. Your contract with the tradespeople (to do work on the house) is treated separately. You have to pay for the work that they completed under the contract. If the damaged property is insured, you may be able to claim on the insurance policy and recover your losses separately.
My home, which I was building or renovating at the time of the disaster was damaged. What should I do?
Usually, you still have to pay for work that tradespeople or your builder did under the contract. Talk to your builder. The builder’s general construction insurance may cover the damage. You will still have a contract between yourself and the builder. Contact your builder and ask for another copy of the contract if you no longer have yours. It is possible that your insurance covers any renovations that were taking place. See Disaster Legal Help’s Insurance factsheet for more details.
Part of my property was destroyed by the Country Fire Authority while fighting a fire. Who pays for the repairs?
Because the Country Fire Authority is a public authority it does not have to pay for any damage caused during firefighting activities. This is not the case if the damage was done on purpose by the public authority or because of its negligence. Get legal advice if you think this is the case. You can also contact the Country Fire Authority to get more information.
If you have fire insurance, this damage may be covered. Collect evidence as soon as you can to give to the insurer. Photographs and a written timeline of what happened may be useful.
My waterline was damaged during a disaster. Who pays for the repairs?
Check with your insurer to see if you are covered for this damage. You should also check your contract with the water supply authority to see if it contains any guarantee of supply or if it tells you what they do to deal with repairs.
My neighbour’s tree fell on my property during a disaster and destroyed the shed. What can I do?
If you are insured, you can make a claim with your insurer. If you are not insured, you can explore the option of making a claim in the Magistrates’ Court (or the County Court if your claim is over $100,000) against your neighbour and/or the persons/entity responsible for the tree falling. The court can order that damages be paid to you, if you are successful.
The law is complex in this area. Get legal advice if you wish to claim for damages.
Where to get help
Victoria Legal Aid
Tel: 1300 792 387, Monday to Friday, 8.45 am to 5.15 pm, for free legal information www.legalaid.vic.gov.au
Federation of Community Legal Centres Victoria to locate your closest community legal centre
Tel: 9652 1500
For phone numbers, see ‘Court locations’ on www.magistratescourt.vic.gov.au and look for the courthouse closest to you.
Victorian Civil and Administrative Tribunal
Tel: 9628 9700 Monday to Friday, 9 am to 4.30 pm
Click here for information about bushfire recovery.
Click here for information about bushfire recovery.