Can a buyer or seller pull out of an unconditional contract in Queensland?

What 'unconditional' actually means

A standard REIQ contract is conditional while dates remain unsatisfied — cooling-off, finance approval, building and pest, and sometimes a sale of another property. Once each of those has passed or been satisfied, the contract is unconditional and both parties are bound to settle on the settlement date.

Unconditional does not mean the contract has settled. It means neither side has any remaining right to terminate for convenience.

If the buyer pulls out

The seller can terminate for the buyer's default and, under the standard contract, forfeit the whole deposit — including the balance deposit if it has been paid. Deposits on a Queensland residential contract are commonly 5 or 10 per cent, so the exposure is real.

The seller's rights do not stop at the deposit. If the property is resold for less, the seller can sue the buyer for the shortfall plus the costs of resale — agent's commission, marketing, holding costs, rates and interest for the period. A buyer who defaults on a $850,000 contract can be chased for far more than the deposit.

• Deposit forfeited to the seller
• Liability for the resale shortfall and resale costs
• Interest at the contract default rate
• The seller's legal costs of enforcement, where the contract allows

If the seller pulls out

A seller who refuses to settle is in the weaker position, because land is treated as unique. The buyer can sue for specific performance — a court order compelling the seller to transfer the property — and can lodge a caveat over the title in the meantime to stop a sale to someone else.

Alternatively the buyer can terminate, recover the deposit, and sue for damages: the extra cost of buying a comparable property in a risen market, wasted inspection, finance and legal costs, and the cost of temporary accommodation and storage.

The narrow exits that do exist

There are limited circumstances where a party can lawfully end an unconditional contract. None of them is a change of heart:

• The other party is in breach — for example the seller cannot give clear title, or a material encumbrance was not disclosed
• The property is materially damaged before settlement, which under the standard contract can give the buyer a right to terminate
• A compulsory acquisition or a notice affecting the property is issued and not disclosed
• Seller disclosure obligations were not met before the contract was signed, which can give a buyer a termination right up to settlement
• Misrepresentation, misleading conduct or a mutual mistake about a fundamental term

What to do if you need out

Do not tell the agent you are pulling out before you have advice. A statement that you will not complete can itself be treated as repudiation and hands the other side an immediate right to terminate and sue.

Get the contract, the disclosure statement and the searches reviewed first — genuine termination rights are frequently found in documents nobody re-read after signing. A negotiated release, with a partial deposit payment, is often available and far cheaper than a default. Call 0488 340 853 before you say anything to the agent.

Unconditional contracts in Queensland — common questions