Question: I have a property for sale in Queensland, and recently signed a contract with a fairly long sale period of 90 days, that was not set to become unconditional until 60 days in.
The contract explicitly states that the buyer was to pay a $20,000 deposit on acceptance. I had assumed the deposit had been paid, but actually found out about 10 days after signing that the buyer had not yet paid, claiming he had an agreement with the agent that it would be paid in the following days – more than two weeks after signing!
At this point I started to have second thoughts about the sale, partially because of the ill feelings I now have about both the agent and the buyer, and because I also now feel that maybe the price I had agreed to is too low.
With this in mind, I told my solicitor to let the buyer know that I was terminating the contract because he was in breach since he had not paid the deposit.
But now, I have just been told by my solicitor that the buyer is threatening to sue for wrongful termination because of his supposed agreement with my agent. It is unclear whether my agent actually made such an agreement, but nonetheless the buyer is now threatening to put a caveat on my property to protect his rights.
I don’t want to be bullied, and I really don’t want to sell to this guy. So, I’m wondering, what are my rights in this situation? Does he have a case to put on a caveat? And worse, does he have a case in court?
Answer: The consequences of a vendor terminating the contract are quite serious and the facts need to be fully investigated before advice specific to your situation can be provided. The following is an outline of the general principles and should not be relied on without specific legal advice about your situation.
The general rule is that failure to pay the deposit is a fundamental breach of the contract entitling the vendor to terminate the contract. In that situation, the purchaser would not have any remedy against the vendor nor would it have the right to lodge a caveat against the title unless there was some variation of the usual contract which provided for the deposit to be paid at a later date (or not at all).
Where an agent has acted without the authority of the vendor and made an agreement with the purchaser for the deposit to be paid at a later time, it is unlikely that this could bind the vendor. The purchaser would probably have the right to sue the agent for damages.
However, in circumstances where the purchaser commences proceedings against the vendor it might be better to reach an agreement with the purchaser on commercial basis rather than get involved in a lengthy and costly legal battle where there can be no guarantee of the outcome.
In other words, in your particular situation if the buyer is now able to pay the full deposit and settle on the basis of the contract signed (in terms of settlement date and price) it may be wiser for you to complete that contract with the buyer than spend thousands of dollars fighting him in Court.
-- Answer provided by George Vlahakis, Kydon Segal Lawayers
Disclaimer: The information in this article is of a general nature only and should not be relied upon as legal advice. You should seek advice for your particular circumstances before entering into any transaction.
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