Buying a house impacted by disaster
If you have signed a contract to buy a property which 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. A lawyer or conveyancer can assist in this. If you end the contract this way, you are entitled to a full refund of money paid, less $100 or 0.2% 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 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 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.
If you can’t end the contract within the cooling-off period, you may still be able to end the contract of sale if the property is destroyed or damaged to the extent where it becomes unfit for occupation. Alternatively, you may seek a reduction in the purchase price on account of the damage. Where this is the case, you must give written notice that you are ending the contract of sale within 14 days of becoming aware of the damage. 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 had insurance, you may be able to obtain benefits of the seller’s policy of insurance. However, be aware that current building standards may result in higher construction costs for a new dwelling. It’s important to ensure that the insurance policy provides sufficient cover.
If the property is only slightly damaged, then you may be obliged to settle on the contract. Any damage to the property would need to be repaired prior to 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 and not entitled 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 amount of the offer and 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. Contact Consumer Affairs if you think that you have accepted an unfair offer.
If you are one of two owners and you want to do something with your jointly owned land (for example, lease, sell, repair or renovate it), you and the other owner both need to agree. Check first to see if you have already made an 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 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 obeyed, and order damages to be paid. VCAT has many other powers and can make any order it thinks fit to ensure that 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. Visit the VCAT for more information.
Property used as security impacted by disaster
A property that has been 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 will need to tell the lender as soon as possible about any damage to a property that is 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 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 assist 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 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 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. 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 that the builder completed. You will still have a 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 is not the case if the damage was done on purpose or due to negligence. If you think this is the case, seek legal advice. You can also contact the for more information.
If you have home and contents insurance, this damage may be covered. In some instances, damage from heat, ash, soot, and smoke may also be covered by your policy. 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 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. The law is complex in this area, so seek legal advice if you wish to claim for damages.
Where to get help
Call Disaster Legal Help Victoria on 1800113432 (weekdays 8am to 6pm) for legal information and referrals or contact your closest community legal to get advice from a local lawyer. For alternative contact options, visit our homepage.
For additional support options and a directory of other services, visit Other organisations that can help.
Victorian Storm and Flood Recovery Hotline
Victorians impacted by the June 2021 storms and 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.
1800 560 760, Monday to Friday, 9am to 5pm (excluding public holidays)
Reviewed 24 October 2022