While it’s more often that a Purchaser may default on a contract, there are certainly occasions where the the Vendor may default on a contract instead. Here are the most common scenarios where a Vendor may find themselves breaching the conditions of the Contract of Sale.
What is a default on a contract?
A party is deemed to be in default when they fail to perform their contractual obligations once a Contract of Sale is signed.
Examples of most common scenarios
Failing to disclose information in the contract
Vendors are obligated to disclose accurate and relevant information to all buyers, especially if the property has had a history of sensitive issues. If you choose to retain certain attributes about your property from the Contract of Sale, you will risk fines and penalties.
Failing to support the purchaser
Vendors must ensure they assist Purchasers to successfully complete their obligations.
For example, the Vendor must provide GST Withholding Notice and FRCGWCC to the purchaser to facilitate a smooth settlement.text
Failing to perform with the Purchaser’s conditions
In certain events, the purchaser may add their own special conditions in the contract which you can negotiate on before signing the contract. Usually, these conditions are to the benefit of the purchaser.
For instance, a Special Condition may obligate a Vendor to ensure that smoke alarms are compliant at settlement. If the Vendor fails to do so, the Vendor must reimburse the Purchaser for monies paid to achieve compliance.
Failing to fulfil the conditions of the contract
Vendors are required to perform several obligations per a Contract of Sale.
For example, the Vendor must deliver the property in the same condition as it was on the day of sale. If there are any damages or changes to the condition before or at the settlement day, the Purchaser may claim compensation.
What is a Default Notice? What should you do if you receive one?
Failing to comply with obligations listed in the contract may lead to a default notice being served to you by the purchaser.
A Default Notice is a notice that details the conditions of the breach, the effects of the default, and the remedial period to resolve the event of default.
Once the Vendor is issued with a notice, they must do everything they can to rectify the default within the timeframe presented. Failure to remedy the default may lead to penalty interests, give rise to claim for compensation, and termination of the contract.
W Legal Group can help!
At W Legal Group, we ensure our clients are fully aware of the contractual terms and assist them in meeting their obligations. Contact us to speak with our team!
