Friday 29th April 2022 from 9am

Wills & Estates Senior Associate Debbie Sage will join Robyn Hyland to talk about the importance of planning for end-of-life care and what options are available.

Young couple lose $75K deposit and dream house in bank blunder


A young Brisbane couple were left devastated after losing their hard-earned life savings of $75,000 which they had paid as a deposit on their dream house, due to their bank not being ready to attend on the due date for settlement and pay their loan funds to the property sellers.  Attwood Marshall Lawyers Commercial Litigation Associate, Georgia Taylor, discusses Queensland property law and what aspiring homeowners need to be aware of when buying in a hot property market.


Mark Trau, 30, and Maddie Goyder, 27, recently got engaged and were looking to buy a home where they could start a family.  They offered $965,000 for a 564 square metre two-storey house in Jindalee, with four bedrooms, two bathrooms, and a pool. The perfect family home in an area the wanted to raise a family.

After entering into a contract to purchase the property, the couple paid a $75,000.00 deposit to the sellers, accounting for less than 10% of the reported contract price. With property prices at an all-time high, this is not unusual.

On the appointed settlement date in the contract, the couple’s incoming financier/bank (Westpac) failed to attend settlement and were not ready to hand over the balance funds required to complete the purchase. In a standard Queensland property sale contract, the date of settlement is deemed to be a ‘time of the essence’ essential term of the agreement. This means that if you are not ready to complete the purchase and hand over the balance purchase price before 5pm on the date of settlement, you are in breach of the contract and the sellers are entitled to terminate the contract, forfeit the deposit, and claim the shortfall on any resale of the property. Most sellers provide extensions of the settlement date when there are delays with banks or other issues that prevent the settlement from happening, but the reality is, if they really want to uphold the letter of the law of the contract, they can legitimately terminate the contract.

As a result of the bank not being ready to settle on the due date, there was a breach of the contract which resulted in the sellers terminating the contract and forfeiting the deposit. Mr Trau and Ms Goyder lost their $75,000 deposit as a result. The pair made two pleas to the sellers for an extension of the deadline, both of which were rejected.  This meant that the seller was able to retain the deposit, which Mr Trau said they had been saving up for since they were in high school.

The sellers then made a request for the $75,000 belonging to Mr Trau and Ms Goyder to be released to their accounts. Within hours of the property returning to the market, it was resold for $65,000 more than what the original buyers had offered! A great outcome for the sellers that walked away with an extra $140,000 in their pocket compared to the original deal — $75,000 from the deposit from the original contract that fell through, and an extra $65,000 from the higher purchase price that resulted after the property was put back on the market — while Mr Trau and Ms Goyder were left destitute and devastated.

Westpac said they were ready for settlement the following day at 11am, missing the deadline by less than 24 hours. It was all too little too late.

Grace periods for settlement of property contracts

In most Australian states a two-week grace period is given if a settlement goes over the agreed date, but not in Queensland.  The time of the settlement date is critical or ‘time of the essence’ in Queensland.  The 14-day grace period given in other states can prevent these kinds of issues from happening. Little things can go wrong, which is not the fault of either party and grace periods can help ensure the original deal can proceed.  In other states, it takes a little longer to settle, between six to eight weeks compared to the usual 30-day settlements in Queensland.

It is important to understand the differences in the contract process when purchasing a property in Queensland compared to other states like New South Wales and Victoria where time isn’t of the essence.

Unlike NSW & Victoria, where lawyers are involved in the ‘exchange’ or signing of the contracts, in QLD real estate agents prepare the contracts and have the parties sign these without them getting legal advice, in most cases. Although there is a 5 day cooling off period after signing, you can still have to pay .25% of the purchase price if you elect to terminate the contract under the cooling off provisions. Furthermore, quite often buyers don’t get legal advice within the 5 day period and they are stuck with an unconditional, time 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, it is very important that you obtain legal advice from an experienced property lawyer or law firm BEFORE you sign anything.

The importance of getting pre finance approval

A loan pre-approval means that a lender has agreed, in principle, to lend an amount of money towards the purchase of a home but hasn’t proceeded to a full or final approval. It allows the buyer to know their maximum available funds to narrow the search, negotiate with more certainty, and bid with more confidence if going to auction.

A pre-approval is a valuable step in purchasing a home or investment property. It’s not a requirement in the home buying process, but it can make life easier and reduce the risk of disappointment of not being able to comply with a finance date because you didn’t take the necessary prior steps.

If a buyer is looking to purchase a house but is not sure how much they can spend, it’s difficult to know where to begin. They might find a property that seems perfect but have no idea whether it’s a realistic option regarding budget.

If a lender pre-approves a loan, they will do so up to a specific amount, so you can focus your house hunting on the properties the buyer can afford, making the whole process a lot easier.

Pre-approval can also make a buyer more attractive to a potential seller, as it indicates that they are serious about purchasing the property and their offer is less likely to be withdrawn due to not being able to satisfy finance.

While pre-approval means that the buyer is more likely to have a loan approved, it doesn’t provide an iron-clad guarantee. The following factors – among others – can affect whether a pre-approved loan proceeds to final approval:

  • Changes to personal circumstances
  • Changes to government regulations
  • A negative valuation of the property
  • A change in the property’s condition

If circumstances have not changed significantly and the property is deemed acceptable to the lender, chances of obtaining final approval following a pre-approval are higher.

Buyers and sellers’ rights

In the case of Mr Trau and Ms Goyder, the two sellers hit back at claims they were “greedy” for pocketing the young couple’s $75,000 home deposit, saying they did nothing wrong.  The elderly couple who moved to Western Australia shortly after the successful sale insisted that they treated Mr Trau and Ms Goyder fairly and that they did nothing wrong.  Their lawyers made it clear settlement was to be on that day and as this failed to occur the contract defaulted. 

They had previously granted two exemptions to Mr Trau and Ms Goyder at the financial clause stage – which is where the property purchase only becomes unconditional provided, they get approval for a bank loan.  The contract had to be renewed once because their financier approved the loan at 5.30pm but the contract had run out at 5pm.  But when the younger couple made two additional requests for a settlement extension, they were denied.

Unfortunately for the buyers, in this circumstance, the sellers are within their right to terminate the contract and keep the deposit.

The home buying process is rarely a straightforward one. However, it is critical that you understand your obligations before you sign a contract to purchase a home. Talking with a lawyer before you start the home buying process may help you avoid entering into an agreement that you may not be able to get out of financially unscathed.

There are legitimate reasons why you may change your mind or why a seller may decide to back out of the deal after a purchase contract has been signed.

Cooling off period

In QLD, there can be a five-day cooling off period after such a contract has been signed. This means that you can get out of the deal by paying a penalty equal to .25 percent of the purchase price.

For instance, if the home was worth $100,000, you would pay a fee of $250 to get out of the deal during that cooling off period. However, this does not apply to any homes that you purchase at an auction as those are bought as-is and the contract is usually unconditional. You may also be able to get out of a contract with no penalty if there are serious issues with the home.

What Are Legitimate Reasons to Break a Real Estate Contract?

Your property lawyer will likely urge you to get a home inspection done prior to officially taking control of the property. The inspection will look for pest damage, structural damage and soil damage that could result in expensive repairs. As well as this, it’s important to check that the sellers haven’t removed any fixtures which were included in the contract.

What Happens if Financing Is Pulled on Short Notice?

One of the most common reasons why a buyer may not be able to complete a deal is because a bank or non-bank lender pulls out at the last second. This could be because there is an issue with the borrower’s credit profile or because the bank doesn’t believe that the home is worth what it is lending to close the deal.

In most cases, the buyer is required to have the cash to settle the deal on the settlement date. If this is not the case, the buyer may have breached the contract, and he or she may be liable for real estate breach of contract damages. Typically, this means that a seller will take a buyer to Court to force a settlement or seek damages. If this is the case, you will usually forfeit your deposit.

However, it is possible that the seller could allow the buyer out of the contract and look for someone else to purchase the property. It may also be possible to amend the purchase price or delay the settlement date until the buyer is able to come up with the necessary funds.

What Types of Real Estate Breach of Contract Damages Can a Seller Pursue?

A seller can come after a buyer for a variety of damages such as legal fees or real estate commissions owed to a broker or selling agent. Sellers are also entitled to the difference between what the house sold for and what the house would have sold for if the buyer had honoured his or her contract with the property owner. Finally, any other costs or amounts deemed reasonable by a judge may be granted to the person selling the property. In some cases, this may mean that a buyer will have to file for bankruptcy.

What if the bank is at fault?

Issues with a bank could cause either the buyer or the seller to delay settlement. While the home buyer may be relying on their bank to approve their home loan application, the seller may need to discharge their previous mortgage before the property can be transferred to a new owner. This means settlement can’t occur until the bank has done its job, so if either the buyer or the seller is late returning important documents or if there are any errors in the paperwork, delays can result.

Often it is the bank that is not ready to release a mortgage because the seller may have put the release authority in late, given many sellers don’t put it in until the property goes unconditional and sometimes this only leaves one to two weeks before settlement. Some banks can turn it around in a week, but others take up to six weeks to prepare for settlement.

The risk of bank error is exacerbated if the purchaser or vendor themselves have been tardy in signing documents or picking up errors by the bank. Or if they use a different signature or name on the bank documents as they do on the legal documents.

Luckily for Mr Trau and Ms Goyder, Westpac agreed to reimburse the young couple as Westpac acknowledged that it was their own mistake that had resulted in the sale of the property falling through as they had made a manual processing error.

This week, Mr Trau and Ms Goyder were given $100,000 by the bank. The cost covered the deposit as well as their solicitor fees. The bank also factored in $5000 each for the stress and anxiety it caused them over the last few weeks including the devastation of missing out on their dream home.

However, the buyer or seller may not be so lucky in every situation! 

If you experience a dispute during the purchase process of buying or selling a property and have suffered significant financial loss because of another party not fulfilling their obligations, you should seek legal advice as soon as possible to find out where you stand and what options are available to claim compensation for your loss.

Attwood Marshall Lawyers – Ensuring you know your rights and helping to resolve disputes

We have dedicated commercial litigation lawyers who understand the complexities of property and commercial law and the wide range of issues that can arise during the process of buying and selling real estate and businesses. Our team can investigate your matter and provide you with helpful, practical advice on the options available to you if you have been impacted by a Contract of Sale falling through. No matter the type of dispute you are faced with, we can provide support and help guide you through this challenging time in your life.

As Commercial Litigation specialists, we have extensive experience assisting with class actions, lease disputes, defamation claims, debt recovery, property-related disputes, building and construction disputes, professional negligence claims, disputes with banks and insurance companies, disputes over contracts, and other business disputes.

It is our goal to tailor our approach to best suit the nature and complexity of each matter.

If you are involved in a property dispute, please contact our Commercial Litigation Department Manager, Amanda Heather, on direct line 07 5506 8245, email or free call 1800 621 071 to find out where you stand.

Read more:

Homeowners losing confidence in building industry despite reforms afoot

Commercial litigation and class actions have erupted in the COVID era


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Georgia Taylor - Senior Associate - Commercial Litigation, Racing & Equine Law

Georgia Taylor

Senior Associate
Commercial Litigation, Racing & Equine Law

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The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice and is of a general nature only. Readers should seek legal advice about their specific circumstances. 

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