Pre-auction homework: legal checks to do before you bid

Auction day is exciting, high-pressure, and – if you haven't done the groundwork – risky. When you buy at auction in Victoria, there's no cooling-off period and no subject to finance clause. The moment the hammer falls and you're the highest bidder, you're locked into a binding contract. You pay the deposit on the spot and you're obligated to complete the purchase.

That's why the real work happens in the weeks before auction day. Here's the legal homework every buyer should complete before raising their hand.

1. Get the Section 32 and contract reviewed

The vendor must provide a Section 32 vendor statement and a draft contract of sale before the auction. Don't wait until the night before to read it – get it to your lawyer as early as possible.

Your lawyer will check for issues that could affect the property or your plans for it: encumbrances on the title, planning overlays, easements, outstanding permits, owners corporation issues, and anything else that's been disclosed (or hasn't been disclosed but should have been).

This is the single most important step. A contract review before the auction gives you the information you need to bid with confidence, or to walk away before you're committed.

At Nextstep Legal, we offer free same-day contract reviews for buyers. If you're looking at a property going to auction, send us the Section 32 and contract early. We'll flag anything you need to know.

2. Sort out your finance

Since there's no subject to finance clause at auction, you need to know your borrowing position before you bid. That means more than just a casual pre-approval conversation. You should have:

• Formal pre-approval from your lender, with clear conditions

• A realistic understanding of the maximum amount you can borrow

• Confirmation from your broker or lender that the specific property type (apartment, older home, rural land) is acceptable as security

• Enough funds to cover the deposit (usually 10% of the purchase price) on auction day

Talk to your broker about whether your pre-approval covers the property you're targeting. Some lenders have restrictions on certain property types, sizes, or locations that could catch you off guard.

3. Commission a building and pest inspection

You can't make the contract conditional on a building inspection at auction, so you need to get it done beforehand. A qualified building inspector will check the property's structural integrity, identify defects, and flag any issues like dampness, termite damage, or non-compliant renovations.

A pest inspection is usually done at the same time. These reports cost a few hundred dollars, and yes, you're spending that money with no guarantee you'll win the auction. But discovering a $50,000 structural problem after you've signed is far worse.

Tip: Book your inspection at least two weeks before the auction. Good inspectors are busy, and you want time to review the report with your lawyer before the day.

4. Check the planning and zoning

The Section 32 should include planning information, but it's worth doing your own checks too. Use VicPlan (the Victorian Government's online planning tool) to look up the property and check:

• Zoning – what's the land zoned for? Are there restrictions on what you can build or do?

• Overlays – are there heritage, flood, bushfire, or vegetation overlays that could affect future development?

• Permits – have there been any recent planning permits issued for the property or neighbouring properties?

If you're planning to renovate, extend, or develop, these details matter. Your lawyer can help you interpret what the planning scheme means for your plans.

5. Review the title and plan

Your lawyer will conduct a title search to confirm who owns the property and check for any registered interests: mortgages, caveats, easements, restrictive covenants, and other encumbrances. They'll also review the plan of subdivision to check the property boundaries and any shared areas.

Easements are particularly worth understanding. A drainage easement running through the middle of your backyard might not bother you, or it might completely derail your extension plans. Better to know before you bid.

6. Check for owners corporation issues

If you're buying an apartment, unit, or townhouse in a managed development, request the owners corporation certificate before the auction. This document reveals the financial health of the owners corporation, any outstanding levies, planned special levies (which can be significant), and whether there are any disputes or legal proceedings.

A property might look great, but if the owners corporation is planning a $30,000 per-lot special levy for building repairs, that changes the equation.

7. Understand the Consumer Affairs due diligence checklist

Consumer Affairs Victoria publishes an official due diligence checklist for residential property buyers. It covers areas that the Section 32 may not fully address, including flood risk, contamination, road widening plans, and heritage restrictions. You can find it on the Consumer Affairs Victoria website. It's a good safety net to make sure you haven't missed anything obvious.

8. Set your limit and stick to it

This isn't a legal step, but it's arguably the most important one. Before auction day, decide on your maximum bid based on your finance, your inspection results, and your assessment of the property's value. Write it down. Tell someone. And when the bidding reaches that number, stop.

Auction energy is real, and it's easy to get swept up in the moment. Having done all the homework above makes it easier to walk away if the price goes past what the property is worth to you.

A timeline for auction prep

Here's a rough guide for a property with an auction date three to four weeks away:

Weeks 3–4 before auction: Obtain the Section 32 and contract. Send to your lawyer for review. Confirm your finance position with your broker.

Weeks 2–3 before auction: Book and complete the building and pest inspection. Run planning and title checks. Review the owners corporation certificate (if applicable).

Week 1 before auction: Review all reports with your lawyer. Clarify any outstanding questions. Set your bidding limit. Arrange deposit funds (bank cheque or electronic transfer capability).

Auction day: Arrive prepared, bid with confidence, and know you've done the work.

How NextStep Legal prepares buyers for auction

At Nextstep Legal, we review contracts and Section 32s for auction buyers every week. We know what to look for, we turn reviews around quickly, and we explain what the documents mean for your specific situation.

Got an auction coming up? Send us the Section 32 and contract for a free same-day review. We'll make sure you're ready before the hammer falls.

This article provides general information about Victorian property law. It's not a substitute for legal advice on your specific situation. If you'd like to discuss your circumstances, get in touch.