The fear of missing out is real and there is a large possibility for buyers and sellers to get swept under the high of signing a contract. Often a couple of days later a buyer may have doubts and want to back out of the contract. It is good to know if and when you can back out of a contract and what the ramifications may be.
Before the Contract is Entered into – Withdrawal of Offer What does it Mean?
It is quite common for a buyer to put an offer on a property and want to later withdraw it because:
- they put in an offer in well above their budget; or
- they have found another property that is more suitable.
The good news for a buyer is, so long as their offer has not been accepted by the seller, they can withdraw their offer at any time. A buyer does not need to provide a reason as to why they are withdrawing their offer. It is key that the buyer ensures they notify their withdrawal before receiving any correspondence (including verbal) that their offer has been accepted. As soon as the offer is accepted, the contract becomes legally binding on both parties.
If looking to withdraw an offer, a buyer should:
- put the withdrawal in writing;
- deliver it to the agent or seller; and
- provide the withdrawal only if they have not been advised their offer has been accepted.
When Making the Offer – Time Based Special Condition
When a buyer makes an offer it is often standard practice for the contract to be drafted at the same time. What a buyer may want to consider is inserting a special condition making it subject to the seller’s acceptance within a certain time frame. If the offer is not accepted within that time frame, the offer will automatically be revoked.
The benefit of inserting this special condition is that a buyer’s offer on a property can be revoked without any repercussion to the buyer. The buyer does not need to take action to notify the withdrawal of the offer, once the time is up on the special condition, the offer is automatically revoked.
Once the Offer has been Accepted and the Contract is signed
A buyer has a right under the Property Occupations Act 2014 (Qld) to terminate a contract after a short period of time once the contract has been signed. So long as there is no written waiver, a buyer has 5 business days from receiving the signed contract (known as the cooling-off period) to terminate it. The buyer can terminate within the cooling off period for whatever reason, but if the contract is terminated within the cooling off, a small fee may be payable to the seller being 0.25% of the purchase price.
Once the cooling off period has expired, the buyer’s only opportunity to terminate the contract is if it is subject to any essential conditions (e.g. building and pest or finance, etc.). If terminating under an essential condition it is best to consult with your solicitor because failure to act reasonably could result in being sued for damages
Can a Seller Withdraw from a Contract?
Once a seller accepts an offer, the seller’s only opportunity to terminate a contract is if a buyer fails to complete an essential condition by the due date. This can be concerning for a seller if the contract is entered into on an unconditional basis, especially in the current hot property market where better offers are a possibility.
A seller may wish to consider inserting a special condition in the contract which makes it subject to the seller being able to terminate the contract if they receive a better offer within so many days from the contract being entered into. This gives the seller an option to keep the property on the market even when a contract has been signed.
If you have any questions or require assistance with revoking an offer or a conveyancing matter in Queensland, please contact the property team at NB Lawyers for more information.
Kayleigh Swift, Associate
Kayleigh Swift is an associate in our Commercial and Property team who assists with Employment Law matters. With a high level of experience in commercial and retail leasing, voluntary and involuntary purchase and sale acquisitions, property development and employee relations, Kayleigh provides practical advice to ensure smooth business transactions.
Chloe Skubis, Lawyer
Chloe Skubis is a Lawyer in our Property team who assists with various conveyancing transactions. Chloe is very experienced in residential conveyancing and is a problem solver. She always provides efficient service to all her clients.