10 Legal Risks Every Melbourne Property Buyer Should Know in 2026

When buying property in Melbourne, many purchasers focus on price, location and financing — but overlook critical legal risks that can significantly impact the transaction.

In 2026, with increasing regulatory oversight and evolving compliance requirements (including expanded anti-money laundering and counter-terrorism financing (AML/CTF) obligations affecting property transactions), conveyancing has become more complex than ever.

This article outlines the 10 key legal risks every buyer should understand before signing a contract.

1. Entering a Contract Without Proper Legal Review

Many buyers proceed to sign a contract without first obtaining legal advice. Doing so may expose you to:

• unfavourable or non-standard special conditions
• limited termination or exit rights
• unforeseen financial liabilities
• title issues

Tip: You should obtain advice from a qualified property lawyer in Melbourne before signing any contract.

2. Inadequate Due Diligence on Title and Planning

A property may be affected by legal or planning constraints that are not immediately apparent.

These may include:

• easements and restrictive covenants
• zoning limitations
• planning overlays (e.g. heritage, flood or bushfire)

Failure to identify these issues may limit how the property can be used or developed.

3. Finance Approval Risks

Pre-approval does not guarantee final loan approval.

Risks may arise due to:

• lender policy changes
• valuation shortfalls
• delays in formal approval

Without a properly drafted finance condition, buyers may be exposed to default risk.

4. Hidden Costs at Settlement

In addition to the purchase price, buyers should be aware of settlement adjustments, which may include:

• council and water rates
• owners corporation fees (which may include contributions toward maintenance, insurance, rectification or compliance works, and other shared liabilities of the owners corporation)

These costs can be material and should be factored into your financial planning. In some cases, significant one-off levies may be imposed by the owners corporation, which should be carefully reviewed prior to purchase.

5. Cyber Fraud and Payment Risks

Property transactions are increasingly targeted by cyber fraud.

Common risks include:

• interception of email communications
• fraudulent substitution of bank account details

Buyers should independently verify payment instructions (for example, by telephone) before transferring funds.

6. AML/CTF Compliance and Source of Funds

Recent reforms led by AUSTRAC are expanding Australia's anti-money laundering and counter-terrorism financing (AML/CTF) framework, with increasing relevance to property transactions.

Buyers may be required to:

• verify their identity to a higher standard
• provide information regarding their source of funds and source of wealth
• explain the purpose and structure of the transaction
• respond to ongoing due diligence requirements

These obligations form part of a broader regulatory framework and are not optional. Failure to comply may result in delays.

7. Off-the-Plan Uncertainty

Off-the-plan purchases involve inherent uncertainty.

Key risks include:

• construction delays
• changes to plans and specifications
• developer reliance on sunset clauses

Careful review of the contract and disclosure documents is essential.

8. Foreign Purchaser Restrictions

Foreign purchasers may be subject to additional requirements, including approval from the Foreign Investment Review Board (FIRB).

This may affect:

• transaction timing
• tax exposure
• eligibility to acquire certain properties

9. Settlement Delays and Default Risk

Settlement may be delayed due to:

• financing issues
• incomplete documentation
• errors in settlement calculations
• damage to, or changes in the condition of, the property prior to settlement

Where the condition of the property is affected between contract and settlement (for example, due to weather events or other unforeseen circumstances), this may lead to disputes, require rectification works, or delay completion.

Failure to settle on time may expose a party to penalty interest or, in some cases, termination of the contract.

10. Relying Solely on Non-Legal Advice

Real estate agents and other parties cannot provide legal advice.

Relying solely on non-legal guidance may expose buyers to avoidable risks.

Need a Property Lawyer in Melbourne?

Buying property is one of the most significant financial decisions you will make.

At Henton Legal, we provide clear, practical and commercially focused advice to assist clients with property transactions across Victoria.

We recommend obtaining legal advice before signing any contract to avoid unnecessary risk.

Contact us today to discuss your matter.

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This article provides general information only and does not constitute legal advice. You should obtain specific legal advice tailored to your circumstances before proceeding with any property transaction.