What happens if something goes wrong after settlement?

Settlement is the point at which the property legally transfers to you and the contract is complete. For the vast majority of buyers, that's also the point at which everything is resolved and you just get on with owning the property.

This is one stage in our complete guide to the Victorian buying process.

But sometimes buyers move in and discover something unexpected. A leak that wasn't visible at inspection. Building work that looks wrong. A problem that was clearly known to the vendor but wasn't disclosed. What are your options when that happens?

The honest answer is: it depends on what the problem is and how it was (or wasn't) disclosed before you bought.

The general principle: buyer beware

Australian property law operates broadly on the principle of caveat emptor, which means "let the buyer beware." Once settlement has occurred and the contract is complete, the property is yours in the condition it's in. You can't simply go back to the vendor because you don't like something about the property that was visible at the time of sale.

This is why the pre-purchase period, including building inspections, pest inspections, reading the Section 32 carefully, and having a conveyancer review the contract, is so important. Those steps are your opportunity to identify issues before they become your sole responsibility.

That said, buyer beware is not absolute. There are circumstances where you may have a claim against the vendor after settlement.

Disclosed defects vs undisclosed defects

This is the central distinction.

If a defect was disclosed in the Section 32 or contract, and you accepted the property anyway, it is generally your problem after settlement. For example, if the Section 32 disclosed that building work was done without a permit, or if the contract noted that the property was sold in its current condition, you purchased with that knowledge.

If a defect was not disclosed, and the vendor knew about it (or should reasonably have known), you may have grounds for a claim. The key issue is whether there was misrepresentation or a material omission in the Section 32 or contract that affected your decision to purchase.

Examples of situations that might support a post-settlement claim:

• The vendor actively concealed a known defect (for example, painting over water damage or mould before inspections)
• The Section 32 failed to disclose a material fact it was legally required to include
• The vendor made a false representation about the property

None of these are simple to prove. Each would require evidence that the vendor knew about the problem and failed to disclose it or actively concealed it. This is where keeping all your pre-purchase documents matters.

Latent defects and their limits

A latent defect is one that was not visible or discoverable through a reasonable inspection. If a defect was genuinely hidden (inside walls, beneath floors, underground) and a professional building inspector conducting a standard inspection would not have found it, there's sometimes an argument that the vendor had an obligation to disclose it.

However, this area is legally complex. Not every hidden defect entitles a buyer to a remedy. The circumstances matter. Getting advice from a property lawyer if you believe you have a latent defect claim is the appropriate step.

Building defects and builder's warranty

If building work was done on the property by a registered builder within the last ten years, the builder's statutory warranty under the Domestic Building Contracts Act 1995 may still apply. This warranty requires the builder to fix defective work for defined periods after completion.

This is separate from any claim against the vendor. Your claim is against the builder, not the person who sold you the property.

The warranty periods are:

• Structural defects: ten years from completion
• Non-structural defects: two years from completion

To pursue a warranty claim, you generally need to be able to identify who did the work, when it was done, and that they were a registered builder at the time. The Section 32 should have permit and builder information for work done in the past decade.

If the builder is no longer in business, there is a home warranty insurance scheme administered by the Victorian Managed Insurance Authority (VMIA) that may provide some coverage.

What about the building inspector?

If your pre-purchase building inspection missed a defect that was reasonably discoverable, you may have a claim against the building inspector for negligent inspection.

Building inspectors carry professional indemnity insurance for this reason. Their report should set out what was and wasn't covered in the inspection, and any liability claim would be assessed against the scope of the inspection they conducted.

If you believe a building inspector missed something they should have found, review the scope of their report carefully and consider getting advice on whether there's a basis for a claim.

Consumer Affairs Victoria

Consumer Affairs Victoria handles disputes related to residential property sales and domestic building work. For issues involving the sale contract, misrepresentation, or disclosure failures, you may be able to lodge a complaint or seek assistance through Consumer Affairs Victoria.

Their online resources are useful for understanding your rights as a buyer and the process for lodging a dispute.

VCAT for building disputes

The Victorian Civil and Administrative Tribunal (VCAT) handles domestic building disputes, including disputes about defective building work. If you have a claim against a builder for defective work under warranty, VCAT is often the forum for resolving it.

VCAT has a Building and Property List specifically for these matters. There are application fees and processes to follow, but it's designed to be more accessible than the court system for these types of disputes.

Civil courts for contractual disputes

For claims against a vendor relating to misrepresentation, undisclosed defects, or breach of contract, the appropriate forum may be a civil court rather than VCAT. The scale of the claim determines whether this goes to the Magistrates' Court, the County Court, or the Supreme Court.

Civil litigation is time-consuming and expensive, and many post-settlement disputes don't justify the cost of court proceedings unless the amount involved is significant. A lawyer can help you assess whether your situation warrants it.

Document everything

Whatever the issue you discover, document it thoroughly as soon as you find it:

• Photographs with timestamps
• Written records of when and how you discovered the problem
• Any communications with the vendor, agent, or previous owner
• Your pre-purchase documents (Section 32, contract, inspection reports, building permits)

This documentation becomes critical evidence if you pursue a claim. The absence of documentation makes everything harder to prove.

The practical reality

Post-settlement claims are difficult, slow, and sometimes expensive. They often don't result in full recovery of costs. The far better position is to identify issues before settlement and either negotiate a price reduction, require the vendor to fix the issue before settlement, or walk away.

Keeping your pre-purchase documents (Section 32, contract, inspection reports) is essential. They establish the baseline of what you knew when you bought, what was disclosed, and what representations were made.

If you discover something significant after settlement, a property lawyer can give you a realistic assessment of whether you have a viable claim and what options are worth pursuing.

Sources

• Consumer Affairs Victoria: Property settlement: the regulator's guidance on settlement and building problems after settlement.
• Sale of Land Act 1962 (Vic): the disclosure and misrepresentation provisions that can be relevant when a problem surfaces.

Sources verified 25 July 2026. Remedies after settlement are fact-specific and time-sensitive.