DraftThis guide has not been reviewed by a lawyer yet. It is general information about Queensland law, not legal advice.
The short version
- A sale can end for many reasons: a condition was not met, someone used a cooling-off or disclosure right, or someone did not settle.
- What happens to the deposit depends on why the sale ended and what the contract says. It is not always lost.
- A buyer who does not settle on time can lose the deposit and may owe more. A seller who does not settle can owe the buyer too.
- Do not ignore a letter about the contract. Notices have deadlines, and the time can be short.
- Get advice from a conveyancer or lawyer early, before anyone tries to end the contract.
What this usually means
A property sale can fall through at several points. The reason matters, because it decides who can end the contract and what happens to the deposit.
Common reasons are:
- a condition in the contract was not met, such as finance or a building and pest report
- the buyer used the cooling-off period
- the seller did not give the right disclosure documents
- the buyer or the seller did not settle on the date in the contract
Conditions not met. Many contracts are conditional on finance or on satisfactory inspections. The Queensland Law Handbook explains that in the standard contract, the buyer may end the contract if, acting reasonably, a report is not satisfactory. The buyer must give notice by 5pm on the inspection date. If the buyer does not, the seller may be able to end the contract instead.
For finance, the buyer must take all reasonable steps to get loan approval. If the buyer did not apply, that is a breach, and the seller may be able to keep the deposit and claim more. If the loan failed through no fault of the buyer, the buyer may be able to end the contract and get the full deposit back.
A condition is not a free way out. A minor issue in a report may not be enough. Dates and wording are strict, so check your contract.
The cooling-off period. A buyer can cancel within 5 business days of getting the signed contract, by signed written notice. The seller must refund the deposit within 14 days, but can keep up to 0.25% of the purchase price. There is no cooling-off period at auction.
Disclosure failures. If the seller did not give the buyer the seller disclosure statement and certificates before the buyer signed, or they were inaccurate or incomplete, the buyer may be able to terminate by notice at any time before settlement. The seller must repay what the buyer paid within 14 days. For inaccurate or incomplete information, the issue must be important, and the buyer must not have known about it.
A buyer who does not settle. Dates in a standard Queensland contract are usually strict. Commentary from law firms says a buyer who is not ready to pay by settlement day can be in breach. The seller may then be able to end the contract and keep the deposit. If the seller resells for less, they may also claim the shortfall. The exact steps depend on the contract, and on whether it counts as an instalment contract, where the seller must give 30 days' notice before ending it for a missed payment.
A seller who does not settle. If a seller cannot or will not settle, the buyer may have rights too. These can include getting the deposit back and claiming for loss. This is a legal question, so get advice early.
Where the deposit sits. The deposit is often held by the agent or a solicitor. It is usually not released to either side until both agree, or a court decides. Ask your conveyancer or lawyer where it is.
What you can do now
- Read your contract and find the clause that applies. Look for dates, conditions and notice rules.
- Do not ignore letters or emails about the contract. Write down every date mentioned.
- Speak to a conveyancer or lawyer before you give notice or stop responding. The wrong notice can cost you the deposit.
- Keep records: your loan application, inspection reports, emails with the agent and any notices you sent.
- If you want to use a right to cancel or terminate, give written notice, signed, before the deadline. Ask how to deliver it so you can prove it arrived.
- If the seller or buyer is late, ask your lawyer about a notice to settle, and what it must say.
- Do not sign a release or a form that gives away the deposit without advice.
Time limits
- Cooling-off: 5 business days, ending at 5pm on the fifth day.
- Conditions: the dates in your contract, such as the finance date and the inspection date. Miss them and you may lose the right.
- Disclosure termination: the notice may be given at any time before settlement.
- Deposit refund after the buyer cools off: within 14 days. After a disclosure termination, repayment within 14 days.
- For a court claim, a general time limit applies. We could not confirm the exact period for a property dispute, so ask a lawyer how long you have.
If it goes further
If the two sides cannot agree on who gets the deposit or whether someone owes damages, a court may have to decide. This is a contract dispute. A court looks at the contract, the notices given and the dates.
Court cases about property can be slow and costly. A letter from a lawyer often resolves it first. Your lawyer can also tell you whether a mediation or a tribunal is an option for your amount.
If the problem is with an agent, for example how a deposit was handled, you can complain to the Office of Fair Trading.
Questions to ask whoever helps you
- Which clause lets me end the contract, and what notice do I have to give?
- Who is entitled to the deposit, and who holds it?
- Could I owe more than the deposit?
- Did the seller give me the right documents before I signed?
- What are the deadlines now, and what happens if I miss one?
Good questions
Do I always lose my deposit if I pull out?
No. It depends on why. If you use your cooling-off right, you usually lose up to 0.25% of the price. If a condition was not met, you may get it all back. If you simply do not settle, you may lose it.
Can a seller end the contract if the buyer is late to settle?
Often yes, but the contract and the steps it sets out matter. In many cases the seller can end it and keep the deposit, and may claim more. Get advice before you act.
What if the seller did not give me the disclosure statement?
You may be able to end the contract at any time before settlement. The seller must then repay what you paid within 14 days.
Can I just change my mind after the cooling-off period?
No. Once the cooling-off period and any conditions are over, the contract is binding. Pulling out then is usually a breach.
Words you might hear
- Condition
- A term that says the contract only goes ahead if something happens, such as loan approval.
- Terminate
- To end a contract, usually by written notice.
- Default
- Failing to do something the contract requires, such as paying on settlement day.
- Forfeit
- To lose money, such as a deposit, because of a breach.
- Time of the essence
- A term that makes a date, such as settlement, strict. Missing it can be a serious breach.
Where this comes from
- Contract of sale for buying a home, Queensland Government
- Cooling-off period for buying a home, Queensland Government
- Seller disclosure scheme, Queensland Government
- The Real Estate Institute of Queensland contract for buying a home, Queensland Law Handbook
- Property Law Act 2023 (sections 85, 91, 104, 105), Queensland Legislation