Who bears the risk if the property is damaged before settlement in Victoria?
In Victoria the property stays at the vendor's risk until settlement. Under the standard Victorian contract the vendor must take reasonable care of the property and hand it over at settlement in the same condition it was in on the day of sale, apart from fair wear and tear. Risk can pass to you earlier if you take possession before settlement, so from that point the exposure is yours. If the property is damaged before settlement, act on your conveyancer's advice rather than assume the sale simply proceeds unchanged. For how settlement timing works, see time and settlement in property contracts (VIC).
How does Victoria compare with Queensland and New South Wales?
The point at which risk passes to the buyer is not the same across states, and in Queensland it happens far sooner than most buyers expect. If you are also looking interstate, compare our guides to property condition, risks and insurance (QLD) and property condition, risks and insurance (NSW).
| State | When risk passes to you | Who bears it until then | If it is damaged before then |
|---|---|---|---|
| VIC | At settlement, or earlier if you take possession | The vendor | The vendor must hand it over in the same condition; you may rescind only if the home becomes unfit for occupation, otherwise seek a price adjustment |
| QLD | 5pm on the first business day after the contract date | You, almost immediately, so insure on signing | You generally must still settle unless the home is unfit for occupation |
| NSW | At completion (settlement), or earlier if you take possession | The vendor | The price may be reduced; for substantial damage you may rescind within a set period after becoming aware of it |
Can I pull out of the contract if the property is badly damaged before settlement?
In limited cases, yes. Victorian law gives a purchaser a right to rescind where the dwelling is so destroyed or damaged that it is unfit for occupation as a home, before you become entitled to possession. You exercise it by giving the vendor written notice within 14 days of becoming aware of the damage, and the deposit and any moneys you have paid are refunded. The bar is high: partial or cosmetic damage that still leaves the home liveable does not qualify, and if the vendor repairs the damage before you are entitled to possession, the right falls away. For anything short of that threshold you are usually looking at a price adjustment rather than walking away, so take your conveyancer's advice on which applies.
What insurance should I arrange, and when?
Arrange your own cover for the home or building, contents and public liability as soon as you sign the contract. Putting cover in place before the property is at your risk avoids complications if damage occurs before settlement. There is a limited statutory backstop: section 50 of the Insurance Contracts Act 1984 (Cth) can treat a buyer as insured under the vendor's building policy in the period before settlement, but only where the vendor actually holds adequate cover, which you cannot verify or control. Treat it as a fallback, not a plan. In practice your lender will require a certificate of currency in your name before it releases loan funds, so holding your own policy from the day you sign keeps settlement on track.
Why shouldn't I rely on the vendor's insurance?
Do not depend on the vendor's cover. The vendor may not have insured the property, may have cancelled the policy, the event may fall outside what the policy covers, or other factors may prevent you recovering. Your own policy is the reliable protection.
What about apartments and townhouses?
In an apartment block the owners corporation insures the building structure and common property, with the cost shared by lot owners. Under the Owners Corporations Act 2006 (Vic) that reinstatement and replacement cover is compulsory, and for a multi-level development section 61 requires the owners corporation to insure the buildings on each lot. So as an apartment buyer you generally need your own contents and public liability cover for your interior, not a standalone building policy. For low-rise developments such as townhouses, who insures the buildings depends on the plan of subdivision and what the owners corporation's policy covers, so check the OC certificate; if the owners corporation doesn't insure your building, you must. For more detail, see buying in an owners corporation (VIC) and the Section 32 vendor statement (VIC).
Risk and insurance at a glance (VIC)
| Scenario | Who bears the risk | Who insures the building | What to do |
|---|---|---|---|
| Standard contract, before settlement | The vendor | The vendor must hand it over in the same condition, apart from fair wear and tear | Still arrange your own building, contents and public liability cover on signing; your lender will require it |
| Strata / apartment | The vendor (until settlement) | The owners corporation (building and common property) | Insure your interior: contents and public liability |
| Townhouse (low-rise) | The vendor (until settlement) | Depends on the plan of subdivision and what the owners corporation's policy covers. Check the OC certificate; if the OC doesn't insure your building, you must. | Check the owners corporation rules; arrange your own building cover if needed |
| Property damaged before settlement | The vendor | — | You may have rights to end the contract or adjust the price. Act on your conveyancer's advice, and don't rely on the vendor's insurance |
General information only — not legal advice. Confirm your situation and the exact contract terms with a licensed conveyancer or solicitor.
