Risks of purchasing property from an online market place

No matter the circumstance in which property is sold or purchased, there are processes that must be followed to ensure that the property transaction is legal and valid. Property Lawyer Crystal Roman summarises some key points to consider.


In the height of an unpredictable property market, we are seeing a new trend of selling and buying real estate on online forums such as Facebook Marketplace and Gumtree. Reasons for this may be that vendors want to minimise agents’ fees by selling property privately, or purchasers who can no longer complete settlement under their Contract of Sale and are scrambling to find a substitute purchaser.

Is the transaction valid and legitimate?

Whilst purchasing property from an online marketplace between an eager vendor and an excited purchaser seems hassle free, there can be significant consequences to all parties involved. It is crucial that an interested buyer satisfies themselves as to the legitimacy and validity of the sale, including consideration of the following key points:

  1. Is the person advertising the property looking to nominate a substitute purchaser in an existing Contract of Sale? If this is the case, this means that the person advertising the property is not the actual owner. Rather, they have entered into a Contract to purchase the property from the actual owner. Sometimes, they might not want or be able to complete the purchase and, instead, they look for a new purchaser who they can nominate to be the substitute purchaser in their place. In the event that a nominee purchases the property from the original purchaser, the nominee purchaser becomes liable for due performance of all obligations under the original Contract. Prior to accepting the nomination, a nominee purchaser should satisfy themselves of any default arising from the Contract or penalty interest resulting from a breach, as they are liable (along with the original purchaser) for any default of the Contract.
  2. Is the advertisement a re-sale of the property? A re-sale of property more commonly occurs on an off-the-plan Contract of Sale. We have noticed an influx of off-the-plan properties, which also include a major domestic building contract attached to it being listed on Facebook Marketplace. It is important to consider whether the original head Contract of Sale allows a re-sale and, where there is a major domestic building contract, does it allow the transfer of ownership and how much will it cost to vary the building contract? Will the associated building contract increase the stamp duty you may need to pay? Similar with a nomination, a purchaser should satisfy themselves that the original purchaser is not in default of the Contract prior to the re-sale.
  3. Are the Contract of Sale and Vendor Statement enforceable under the Sale of Land Act 1962 (VIC) (“the Act”)? Importantly, has the vendor complied with Section 32 of the Act and disclosed all matters relevant to the property, including particulars of any charge over the land, the amount in rates; taxes or other outgoings, descriptions of any restrictions affecting the land or particulars of any notices or orders from a public authority or government department. Failure to provide a valid Contract of Sale and Vendor Statement may result in a loss to the purchaser (who may rescind the Contract in certain circumstances pursuant to section 32K of the Act) and subsequent claim made against the vendor; and
  4. Where the vendor sells the property without an agent, does the vendor have a legal representative to hold the deposit money in trust? Whilst a vendor may pursue a private sale without an agent, they must have a legal representative that has a legitimate trust account in which deposit moneys can be held. Purchasers should not transfer deposit moneys directly to the vendor. Section 24 of the Act makes it unequivocally clear that deposit moneys must be held in trust by either a legal practitioner, conveyancer or estate agent until such time the deposit moneys may be paid to the vendor.

Whilst this article covers only a few key points to consider when searching for real estate on an online marketplace, purchasing or selling property is a major decision that needs a lot more thought than purchasing used furniture.

No matter the circumstance in which property is sold or purchased, there are processes that must be followed to ensure full compliance with the relevant legislation. Whether you choose to buy or sell via traditional methods or you intend to utilise an online marketplace, our Accredited Specialists in Property Law can provide you with sound advice to maximise your interests as vendor or purchaser.

How Sharrock Pitman Legal can assist

When dealing with real property, you are dealing with one of your most valuable assets. Make sure that you are getting the proper protection you need. As Accredited Specialists in Property, our lawyers can advise  buyers on all aspects of their property purchase, including contract negotiation and review, as well as managing the property settlement process.

Where problems arise after the sale is completed, our Property Law team can provide guidance on cost-effective strategies to resolve any issues with minimal delay.

Further Reading

Nominating under a Contract of Sale

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

For further information contact  
Crystal Roman

Crystal Roman is lawyer in our Property Law team. Crystal can be contacted on (03) 8561 3328 or by email crystal@sharrockpitman.com.au.


For fifty years Sharrock Pitman Legal has made a significant and long term contribution to meeting the legal needs of business owners and residents in the City of Monash and greater Melbourne area.

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