As Victorians carry on during these uncertain times of the Covid-19 pandemic, property buyers have been facing many unexpected challenges. You may find that changes to your employment have resulted in a loss of income, therefore reaching the settlement of your recent property purchase is no longer a practical option. This article will look into how and when a purchaser can withdraw from a contract of sale.
Your first opportunity to end the contract is during the cooling-off period. You can give the vendor or the vendor’s agent written notice that you are ending the contract within three clear business days of the day that you sign the contract. You would be entitled to a refund of all the money you paid except for $100 or 0.2% of the purchase price (whichever is greater).
Please note that the cooling-off period does not apply if:
- you bought the property at or within three clear business days before or after a publicly advertised auction;
- the property is used primarily for industrial or commercial purposes;
- the property is more than 20 hectares in size and is used primarily for farming;
- you and the vendor have previously signed a contract for the sale of the same land in substantially the same terms; or
- you are an estate agent or a corporate body.
Subject to finance
If you have added in a clause specifying that the contract is subject to a loan being approved, you may end the contract if finance approval is not obtained by the date allowed by the vendor.
You may terminate the contract if the loan is not approved by the approval date, but only if you:
- immediately applied for the loan;
- did everything reasonably required to obtain approval of the loan;
- serve written notice ending the contract on the vendor within two clear business days after the approval date or any later date allowed by the vendor; and
- are not in default under any other condition of this contract when the notice is given.
All money must be immediately refunded to you if the contract is terminated in this way.
Be aware of the costs before you buy, click here for our article: Hidden fees and costs to buying a house.
Subject to a report
If you have included a clause specifying that the contract is subject to a report, such as a building report or a pest report, you would be entitled to cancel the contract if the property receives an unfavourable report.
You may terminate the contract within 14 days from the day of sale if you:
- obtain a written report from a registered building practitioner which discloses a current defect in structure on the land and designates it as a major building defect; or
- obtain a written report from a pest control operator licensed under Victorian law which discloses a current pest infestation on the land and designates it as a major infestation affecting the structure of a building on the land; and
- give the vendor a copy of the report and written notice ending the contract of sale; and
- are not in default of any other condition of the contract of sale.
Again, all money must be immediately refunded to you if the contract is terminated in this way.
For helpful information from Consumer Affairs Victoria, click here for a buyer’s checklist.
Deed of cancellation
If the contract is not terminated within the above-mentioned time frames, a contract may be ended if the purchaser and the vendor have agreed to cancel and have signed a deed of cancellation. The signed deed states that the parties mutually release each other from all claims and actions arising under the contract as and from the effective date.
Feel free to contact us if you have any questions, get in touch via email or phone: firstname.lastname@example.org or +61 3 9590 6180.