Property

Buying a house impacted by disaster

If you have signed a contract to buy a property that was then destroyed or damaged by a disaster, your ability to withdraw from the purchase depends on when you signed the contract and the extent of the damage to the property. 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.

You can withdraw from a contract within three clear business days after the date of signing. This is known as a cooling-off period. To end the contract within the cooling off period, you must provide written notice to the seller or the seller’s real estate agent, following the requirements set out in the 'Important Notice to Purchaser’s – Cooling Off' notice in the contract. A lawyer or conveyancer can help with this. If you end the contract this way, you are entitled to a full refund of money paid, less $100 or 0.2 per cent of the purchase price, whichever is greater. For example, at a price of $250,000, the amount would be $500.

The cooling-off period does not apply if:

• the sale of the property is by publicly advertised auction
• the property was purchased on the same day as the publicly advertised 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 larger 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.

Any contract to which the cooling-off period applies must contain a notice advising you that you have the right to terminate the contract for sale within three clear business days after the date of signing (‘Important Notice to Purchaser’s – Cooling Off’). If the contract does not include this notice, you have the right to terminate the contract at any time before you are entitled to possession of the property or to get rent or income from the property.

You may still be able to end the contract of sale after the cooling-off period if the property is destroyed or damaged during the settlement period and becomes unfit for occupation. If you are not yet in possession of the property or receiving any rental or income from the property, you have the right to terminate the contract. In this case, you must give written notice that you are ending the contract of sale within 14 days of becoming aware of the damage.

If the seller restores a destroyed or damaged property before you become entitled to possession or the receipt of any rental or income from the property, you will not be able to terminate the contract for sale and should seek advice from a lawyer or conveyancer.

Alternatively, you may seek a reduction in the purchase price because of the damage, as long as the damage or destruction is not your fault, or you were not involved in the damage or destruction. Where the property is still liveable, the seller must arrange to fix the property. If this applies, seek advice from a lawyer or a conveyancer.

If the seller has insurance, you may be able to get benefits of the seller’s insurance policy. However, current building standards may increase construction costs for a new dwelling. It’s important to ensure that the insurance policy provides sufficient coverage.

If the property is only slightly damaged, you may be obliged to settle on the contract. Any damage to the property would need to be repaired by the seller before settlement. You may be able to delay settlement until the repairs are done or seek compensation. However, if the damage is not repaired, you may only be entitled to compensation, not to end the contract.

Selling a house impacted by disaster

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 offer amount. You can also talk 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. It is important to get confirmation from your
lender about the amount payable to discharge any loan secured by the property. Contact Consumer Affairs Victoria if you think you have accepted an unfair offer.

If you are one of two owners and want to do something with your jointly owned land (for example, lease, sell, repair or renovate it), you and the other owner must agree. Check first to see if you have already made an agreement with the other owner about how to divide property, because this may address the issue. You may need to get a title search to confirm in what capacity parties own the property. We recommend you seek legal advice about this.

If you cannot agree to the sale of the property or its division, you may need to apply to the Victorian Civil and Administrative Tribunal (VCAT) for an order. VCAT is generally the correct forum for these disputes, but there are some limitations. VCAT runs more informally than a court. It can help resolve your dispute, make decisions that must be followed, and order damages to be paid. VCAT has many other powers and can make any order it thinks reasonable to ensure a just and fair sale or division of property occurs. Among other powers, VCAT can order an auction or private sale (including setting a reserve price) or require one co-owner to pay compensation to another co-owner. All parties must follow a VCAT decision.

Visit the VCAT website for more information.

Property used as security impacted by disaster

A property used as security for a loan acts as a protection for the lender if you miss loan repayments. If the property used as security was damaged or destroyed, you still need to make regular loan repayments. You must tell the lender as soon as possible about any damage to a property being used as security.

In most cases, the lender has standard requirements for the property being used as security, such as requiring that you have insurance on the property. If your property is part of a strata scheme, the owner’s corporation will normally deal with insurance, and the insurance cost is passed down to the owners through the owner’s corporation fees. If the property is damaged or destroyed, the lender may require you to reinstate the property to their satisfaction. You may make a claim with your insurer to help with those costs. After this happens, you and the lender will have to work together to use that money for repairs, replacements, and rebuilding. You can expect the lender to take control of any negotiations with the insurer. Not all arrangements work like this, though. Check the terms of your mortgage document for more information.

If the destroyed property was not insured, the lender could require you to give more security or repay the loan in full or in part. The terms of the loan agreement will cover this. Contact a lawyer at any point in this process if you need assistance.

Construction impacted by disaster

If your property was under construction when it was damaged or destroyed by a disaster, you will still have to pay for any work the builder or other tradespersons have completed. You will still have a building contract between yourself and the builder. Ask your builder for another copy of the contract if you no longer have yours.

If the property was insured, you may be able to claim on your insurance policy and recover your losses separately. The builder’s general construction insurance may also cover the damage. For more information, see our page on Insurance.

Damage caused by the CFA

Because the Country Fire Authority (CFA) is a public authority, it does not have to pay for any damage caused during firefighting activities. This does not apply if the damage was done on purpose or is due to negligence. If you think this is the case, seek legal advice. You can also visit the CFA website for more information.

Damage caused during firefighting may be covered by your home and contents insurance. In some instances, your policy may also cover damage from heat, ash, soot, and smoke. Collect evidence as soon as you can to give to the insurer. Photographs and a written timeline of what happened may also be useful. For more information, see our page on Insurance.

Damage to a water line

The 'main to meter pipe' (the pipe that connects the water main to your internal pipe and runs underneath the property boundary) belongs to the landowner, but is the responsibility of the water authority. If this pipe is damaged, the water authority will generally cover the cost of repairs.

All plumbing works from the meter to the house are internal pipes and are the responsibility of the landowner. Check with your insurer to see if you are covered for this damage. You should also check your supply contract with the water supply authority to see if it contains any guarantee of supply or if it tells you how they deal with repairs.

Damage caused by a neighbour’s tree

If you are insured, you can make a claim with your insurance company.

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.

If you are successful, the court may order that damages and your legal costs be paid.

If you are unsuccessful, you will have to pay your own legal and other costs, and you may also be required to pay the costs of the other party.

The law is complex in this area, so seek legal advice if you wish to claim for damages.

Where to get help

For legal information and referrals, call Disaster Legal Help Victoria on 1800 113 432 (Monday to Friday, 8 am to 6 pm). You can also contact your closest community legal centre to get advice from a local lawyer.

For more support options, see Other organisations that can help or find Other ways to contact us.

Victorian Flood Recovery Hotline

Victorians impacted by the June 2022 floods can call this number for help or assistance with registering for clean-up of structures, accessing a recovery support worker, mental health and wellbeing support, and financial counselling and information on payments.

Call 1800 560 760, Monday to Friday, 9 am to 5 pm (excluding public holidays).