An interstate buyer paid a $2,000 deposit and signed a Melbourne contract of sale without a lawyer. The building report came back with serious defects, but a special condition had quietly narrowed the building inspection clause, and the vendor’s representative refused to release the money. Haitch Conveyancing was engaged on the Friday afternoon. The contract was at an end and the full deposit was back by the Monday.
An overview of the matter at a glance.
Interstate buyers purchasing in Melbourne
Contract termination & deposit recovery
Strata-titled unit
Melbourne's inner west, Victoria
Full $2,000 refunded, no litigation
Our clients live interstate. They were buying a modest unit in Melbourne’s inner west so their adult son would have a long-term roof over his head — the kind of purchase where every dollar counts and the buyers are not in the same city as the property.
They did what a great many buyers do. They dealt directly with the selling agent, transferred a $2,000 holding deposit to the agency, and signed the contract of sale electronically two days later when the signing link arrived. At no point in that sequence had a lawyer or conveyancer read the contract.
They were not careless. They had arranged a building and pest inspection and had negotiated for the contract to be conditional on it. When the inspection came back showing significant structural cracking, they texted the agent that same afternoon to say they were not proceeding, and that the report would follow the next day. As far as they were concerned, that was the end of it.
It was not. Days later they were being told the contract stood and the deposit would not be returned. That is when they called us — with hours left on the contractual deadline.
Once we read the contract, the problem was not the defects. It was the wording our clients had already agreed to.
The standard building report condition — General Condition 21 — had been varied by a special condition. Under that variation the buyers could only end the contract if the report expressly identified and designated a current defect in the main dwelling as a "major structural defect".
The same special condition stated that a report does not satisfy the clause merely by referring to a "major defect", "serious defect", "safety issue", "recommended repair" or "further investigation". The original report used exactly that language.
The $2,000 had been paid to the agency before there was a contract to secure. Recovering it meant giving the vendor's representative a legal basis they could not refuse — not simply asking politely.
Separately from the building report argument, the buyers had a cooling-off right under section 31 of the Sale of Land Act 1962 (Vic) — and it was days from expiring. Whatever happened with the contract dispute, that window had to be protected.
We worked through the matter in clear stages, keeping the clients informed at every milestone.
We identified that the exit was governed by General Condition 21 as varied by the special conditions, and that the report already in the vendor's hands failed the test on two independent grounds: it did not use the words "major structural defect", and it did not evidence a registered practitioner or compliance with AS 4349.1–2007. General Condition 21 requires both: the report has to come from a registered building surveyor, building inspector, domestic builder or architect, and it has to state that it was prepared in compliance with Australian Standard AS 4349.1–2007.
We wrote to our clients with the exact clause wording and told them precisely what the inspector needed to add: the defect designated as a major structural defect, the registered building practitioner's name and registration number, and a statement that the report was prepared in compliance with AS 4349.1–2007. The amended report issued the same day and designated the cracking as a major structural defect.
Late that Friday afternoon we served written notice on the vendor's representative ending the contract under the building report condition — with page references to the designated defect and to the practitioner's credentials, and with our clients' account details for the refund.
The notice was refused within twenty minutes, on the basis that it relied on a different version of the report. We responded immediately: the report as served satisfied the clause, the deposit was to be released, and if it was not, the matter would be taken to VCAT or the Melbourne Magistrates' Court — with that correspondence relied on for costs. The selling agent then confirmed he had no objection to the release.
On the Saturday we set out three paths in writing with the numbers attached to each: exercise the statutory cooling-off right (with the vendor entitled to retain 0.2% of the price — $660 on a $330,000 purchase); issue proceedings in the Magistrates' Court against the vendor and the agent for the refund, interest and costs; or walk away. We also explained how a purchaser's caveat could be used as leverage. Our clients chose the fastest, lowest-risk route.
On the Monday — the last day of the cooling-off period — we served formal notice under section 31 of the Sale of Land Act 1962 terminating the contract and confirming our clients' entitlement to a refund of the deposit. That put the termination beyond argument, whatever the vendor's position on the building report.
The contract was at an end and the entire deposit was returned to our clients. Notably, the vendor was legally entitled to retain $660 as the cooling-off penalty and did not deduct it — the pressure applied through the building report correspondence made a full refund the path of least resistance for the other side.
No proceedings were issued. No caveat was needed. Our clients paid a fraction of what a contested Magistrates’ Court claim would have cost them, and walked away free to buy something else.
Six things worth knowing before you sign anything in Victoria.
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