Question: Last Wednesday the seller of a Brisbane unit and I both signed a contract of sale. I'm still within the cooling off period.
He calls me on Saturday saying he wishes not to go ahead with the sale, because he's got sizeable debts and his bank won’t finance his planned property purchase. I offered to buy the property and let him rent it until he can afford another place. He answers me saying he wants to own rather than rent. He also mentioned that he will compensate any fees and costs I have incurred so far.
He texts me Sunday saying he wants to go ahead because it would be messy otherwise. Again he texts me yesterday saying that he won't go ahead after he spoke with his accountant and parents, however he will give me his final answer tomorrow morning.
Can he back out without my consent? If not, how can I protect the unit from him until settlement day? How much and how can I claim losses – and, if he is in financial difficulty, can he be 'forced' to pay up?
Answer: Once a contract of sale is signed by both buyer and seller, and becomes binding on them, there is a contractual obligation placed on both parties to fulfil the terms of the contract. This includes where a cooling off period may apply.
If a seller changes their mind after the contract is formed between both buyer and seller, the law protects buyers who may be faced with this scenario. Where the seller fails to perform their contractual obligations (such as failing to provide to the buyer
possession to the property and delivery of unencumbered title), the seller will be in default. In this situation, the buyer has certain rights available, which includes either affirming or terminating the contract. If the buyer affirms the contract it can seek specific performance of the contract, (i.e. where the seller is forced to sell to the buyer). The buyer can also sue the seller for damages.
Alternatively, the buyer may terminate the contract of sale and sue the seller for a claim for damages for loss suffered as a result of the seller’s default. This includes legal costs on an indemnity basis. The buyer will also be entitled to a refund of the deposit and any interest earned on such deposit.
How to safeguard your contract:
- Whether as seller or buyer, it is always recommended you engage a solicitor to advise on the terms of the proposed contract before you sign any document committing to the purchase or sale. The conduct of the parties prior to entering into the contract may become very relevant in any litigation proceedings that ensue following a seller’s breach of the contract.
- In Queensland, lodge a Settlement Notice over the title to the property. Sections 138 to 152 of the Land Title Act 1994 (Qld) create a procedure for lodgement in the Registry of Titles of a Settlement Notice. A Settlement Notice, once entered, alerts all interested parties who search the Automated Titles System to the fact that an intended settlement is imminent or a settlement has occurred and lodgement of an instrument is imminent.
- Lodge a caveat over the title to the property. If the buyer suspects the seller may not follow through on their commitments to them, and may, for example, try to sell the property to another buyer for a higher price, the caveat will prevent any dealings with the property for a certain period of time, usually 3 months in Queensland.
- In situations where the seller has changed their mind which has resulted in leaving the buyer with nowhere to live, include a condition in the contract of sale whereby the sale of the property from which they are moving is contingent upon the completion of this sale from the seller.
-- Answer provided by Despina Priala, Priala Legal, 07 5527 8796 or firstname.lastname@example.org
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now
Top Suburbs :
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.
We value your privacy and treat all your information seriously - you can check out