When can I lose my deposit? Why time is of the essence?
The young couple who recently lost their Brisbane dream home and deposit are in the news and for good reason.
In Queensland in contrast to other Australian states, time is of the essence of home contracts. This means that as soon as you sign a contract all the time limits including finance, building and pest and settlement are essential. So if finance is not approved in time, the sellers can immediately terminate and resell. Once the Contract is unconditional, if you or your bank cannot settle on the due date then it is sudden death; the seller may be able to terminate, resell and keep your deposit.
In the case of the young Brisbane couple, their bank failed to provide the loan funds on the settlement day. Their seller, seeing an opportunity in a rising market, immediately terminated, kept the deposit and resold to someone else for a higher price. This seems unfair but is entirely legal from the seller’s point of view.
The problem in this case was with the bank and currently banks are under pressure for approvals and settlements. The bank under media pressure have refunded the deposit with some extra cash to the couple, however this is small consolation where they have lost out on their dream home. Sometimes lack of organisation can mean that banks and buyers are not ready to settle on time. Cut price conveyancing can mean that sometimes corners are cut and people are not properly advised or protected.
Having an experienced, organised lawyer to handle your conveyance is very important as buying or selling a home is often the most significant legal transaction in life.
Buying property in Queensland is very different to other states of Australia. We strongly recommend that you consult with experienced professionals before you sign a Contract and remember:
- Real estate agents generally prepare Real Estate Institute of Queensland (REIQ) and Queensland Law Society approved standard contracts.
- Before you sign anything seek legal advice, we at McLaughlins Lawyers can review your contract to give you peace of mind.
- Unlike most other states, in Queensland Contracts are generally signed by both parties before searches are conducted, which are the buyer’s responsibility. Not all adverse search results allow you to pull out or receive compensation.
- Cooling off is 5 business days from signing for residential, but if you pull out using cooling off a penalty of 0.25% of the purchase price can be imposed, so research values and the property carefully before you sign.
- Most contracts are subject to building and pest inspections and finance within 14 days. We recommend extended conditions at least 21 days in the current market and at least 21 days from finance approval to settlement to ensure the bank is ready to settle.
- Once contracts are unconditional both parties must settle but there is a lot to organise to ensure you are ready to settle.
- Time is of the essence in Queensland – this means missing a settlement date could cost you your dream home and your deposit. Whilst you can request an extension of any due date under the Contract, there is no obligation on the other party to agree.
We offer a contract review before you sign which can help identify issues and smooth the process, so contact us early to protect your rights. Each property and transaction is unique and the above list does not cover the detail or legalities so getting the right advice can save you time, money and stress.
Buying property especially your home is exciting but can be complex in Queensland so call us for a quote to get expert advice and ensure you miss the pitfalls and move into your dream home or investment sooner.
McLaughlins Lawyers have been helping people buy and sell properties in Queensland for over 60 years. We understand how the Queensland property system works and can help you avoid the pitfalls and successfully become proud owners – call Teresa Kearney or Pip Davis on 07 5591 5099 who will be happy to help.
McLaughlins Lawyers, your experienced Gold Coast lawyers, we stand beside you and are here to help you navigate the property market.
Author: Teresa Kearney, Senior Associate
Director: Ian Kennedy
Date: 29 November 2021