Frequently Asked Questions

Q: Can the buyer or seller rescind on the contract?

The legality of a rescission of the contract by either the buyer or the seller is based in both State Conveyancing legislation and the common law of contract. Broadly, if the buyer or seller place one another in a position where the contract cannot be completed then the contract may be rescinded. However, there are stipulations placed on the situations where the contract is considered untenable.

Buyer

There are limited circumstances in which a buyer may rescind on a contract for the sale of land. Recision on the sale has to be made in writing to the seller within a certain statutory period.

Recision of the contract is generally only available to a buyer of land where the parties are capable of being placed back in their original positions before the contract was made. However, this can be difficult when intervening events have occurred such as the securing of finance.

However, the buyer is broadly entitled to rescind wherever there is a situation that the seller of the property is unable to follow through with the contract for the sale.

Consider the example of the sale of property that has been illegally built on Council land where such a building is prohibited. The sale cannot proceed, as the seller is unable to transfer good title to the buyer. In such a circumstance, the contract becomes untenable and the buyer may rescind from the purchase.

Buyers are able to rescind in a variety of other situations where the seller has breached the terms of the contract or failed to answer requisitions that has not enabled the sale to finalise.

An example of a failure to reply to a requisition is where the seller has failed to disclose important information regarding the nature of the property that, had the buyer known, would not have reasonably entered into the contract.

Seller

Yes, there must be a clause in the contract that allows the seller to rescind on the contract. However, this recision must be made on the basis of 'reasonable grounds' and not be an arbitrary or capricious act.

If a seller rescinds a contract without reasonable grounds then a buyer can pursue a legal remedy in the courts to recoup costs incurred in the conveyancing process.



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