Attwood Marshall Lawyers Property and Commercial Law Senior Associate Tobie Mitchell discusses cautionary cases that highlight the hidden risks of deposit deadlines, setting out what aspiring homeowners need to be aware of when buying property in Queensland.
A costly lesson in buying property
A Queensland Supreme Court decision has highlighted just how unforgiving property contract law can be, after a buyer lost their entire life savings over a late deposit payment.
Stephen Evans signed a contract in January 2024 to buy a Shailer Park home for $985,000, with a $98,500 deposit due into the realtor’s trust account on 23 January.
Unable to transfer the full amount in one transaction due to his bank’s daily transfer limit of $50,000, Evans contacted the real estate agent to explain the delay but confirmed he would transfer the next day. The agent texted him “ok” and that they’d let the seller know. Evans proceeded to pay the deposit in instalments over two days, believing the arrangement had been approved.
It had not. The seller told the court she had never authorised any extension and was unaware that the late payment had even occurred. On 29 January, her solicitors formally terminated the contract.
The Supreme Court found in the seller’s favour. The real estate agent had no actual or ostensible authority to grant an extension on the seller’s behalf – that was a matter for the solicitors with the relevant authority, not the agent. Because of the breach of contract, Evans lost his $98,500 deposit entirely.
What the law says
It is a harsh outcome, but it reflects the law in Queensland. Payment of a deposit by the due date is an essential term of a standard Queensland property contract, with time of the essence.
If settlement funds or a deposit are not paid by the agreed deadline, the seller is legally entitled to:
- terminate the contract,
- keep the deposit,
- claim any shortfall on a resale of the property, and
- claim damages (such as legal costs, moving expenses).
This is markedly different from other states.
In New South Wales and Victoria, lawyers are involved in the contract “exchange” process from the outset, meaning that, from a timing perspective, buyers are typically more informed on their obligations and responsibilities and therefore less likely to make any costly errors.
In Queensland, real estate agents prepare and present contracts for signing, with the onus on the buyer to seek legal advice beforehand. While there is a five-day cooling-off period after signing, terminating under those provisions can still cost you 0.25% of the purchase price. Many buyers don’t seek legal advice within that window and could find themselves bound to an unconditional, time-is-of-the-essence contract.
If you are obtaining finance, you should always ensure the contract is ‘subject to finance.’ Usually, it will also be subject to a satisfactory pest and building report. For these reasons, we recommend that buyers obtain legal advice from experienced property lawyers before signing anything.
What if the bank is at fault?
In another Queensland case, a buyer instructed their bank to transfer their deposit well within business hours, but the bank did not process the payment until after 8pm – hours past the contract’s 5pm deadline.
The resulting late receipt gave the vendor grounds to terminate the contract and retain the deposit.
Bank delays are a common (and often overlooked) cause of settlement failures. Both buyers and sellers can be affected. A buyer may be waiting on finance approval, while a seller may need their bank to discharge an existing mortgage before the property can be transferred. Some banks turn mortgage releases around within a week; others take up to six weeks.
The risk increases when either party is slow to return signed documents, or when there are discrepancies between the name or signature used on bank documents and those on legal documents.
Any of these issues can push the settlement past the deadline. Under Queensland law, the consequences can be severe regardless of who is at fault.
This is what happened to a young Queensland couple in 2021. They had paid a $75,000 deposit on a residential property and were ready to settle, but their bank (Westpac) failed to attend the settlement and could not hand over the balance funds by the required time. Westpac indicated it could settle the following morning, missing the deadline by less than 24 hours.
The sellers were legally within their rights to terminate and keep the deposit. Fortunately for the couple, Westpac acknowledged the error was entirely their own and agreed to reimburse $100,000 — covering the deposit, legal fees, and $5,000 each for the stress and distress caused. Not every buyer will be so fortunate.
Always go through your solicitor
As in the Evans v Jan case, if you encounter any issue with a deposit deadline or settlement date, contact your solicitor immediately. Agents do not have the authority to vary contract terms on the seller’s behalf, and any assurances they give you may not be worth anything in a court of law.
Your solicitor is the right person to negotiate extensions, document any agreed changes, and protect your position. Acting quickly (and through the right channels) can make all the difference.
Attwood Marshall Lawyers – your local property law experts
The home-buying process is rarely straightforward but understanding your obligations before you sign is critical. Seeking legal advice early can help you avoid costly mistakes that are very difficult to undo once a contract is in place.
Our property law team works closely with agents to ensure contracts of sale are watertight, helping you reach settlement faster. Careful advice and guidance will reduce and potentially avoid the backlash from termination or dispute over a contract.
For contract advice and all your conveyancing needs, talk to our Property and Commercial Law Department Manager Sarah Jones, on 07 5506 8233, sjones@attwoodmarshall.com.au, or free call 1800 621 071.
If you are involved in a property dispute or have suffered financial loss because of a contract falling through, our dispute resolution team can investigate your matter and advise you on the options available.
Contact our Commercial Litigation Department Manager, Georgia Trapp, on 07 5506 8278, email gtrapp@attwoodmarshall.com.au or free call 1800 621 071.
