How to Spot Auction Contracts With Hidden Risks

 
 

Auction contracts in Victoria are unconditional and legally binding the moment the hammer falls. There’s no cooling-off period and no chance to renegotiate. That makes it critical to review the contract before auction day — especially to uncover hidden risks.

Here’s how to spot them.

1. No Finance Clause Allowed By law, auction contracts in Victoria cannot be made subject to finance. If your bank fails to settle, you’ll be in breach and may lose your deposit or face legal action. Ensure you have:

  • Full, formal finance approval (not pre-approval)

  • Deposit funds ready

  • Confidence the lender’s valuation won’t be an issue

2. Unfair Special Conditions Auction contracts often include special conditions that favour the vendor, such as:

  • Penalty interest clauses with high daily rates

  • Clauses that shift responsibility for building or repair issues to the buyer

  • Broad “as-is” or “as-inspected” wording

  • Short settlement timeframes with no flexibility

These clauses cannot be changed after you bid. If you don’t review and negotiate them before auction, you’re stuck.

3. Missing or Risky Inclusions The contract may:

  • List goods sold “as inspected” without specifics

  • Omit fixtures like dishwashers or light fittings

  • Be silent on working condition of services

You need to confirm what’s included in writing before bidding. Photos and memory aren’t enough.

4. Owner-Builder or Renovation Risks If works have been done at the property:

  • Has the vendor disclosed them?

  • Are there permits, final inspection certificates, or warranty insurance?

Owner-builders must comply with strict disclosure rules. If they haven’t, you may be exposed.

More on this: How to Check for Dodgy Renovations Before You Buy

5. No Building and Pest Clause Auction contracts don’t include a building or pest inspection clause. If you want to inspect, you must:

  • Organise inspections before auction

  • Accept the results as part of your decision to bid

You cannot cancel after auction based on defects.

6. Section 32 Deficiencies The Vendor Statement (Section 32) must be reviewed for:

  • Outdated title or planning documents

  • Missing owner corporation details

  • Undisclosed easements, caveats or notices

Even minor omissions can affect your rights or future plans.

Our Advice Before Auction At Victorian Property Settlements, we:

  • Review auction contracts in plain English

  • Flag risky clauses or omissions

  • Advise you of your obligations and non-negotiables

  • Recommend protective actions before you bid

Click here to request a pre-auction contract review and go in with eyes open.

Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers. Visit: www.victorianpropertysettlements.com.au