Buyers terminate contract during cooling-off period and cancel
The buyers signed a Real Estate Institute of Queensland Contract
of Sale for the purchase of a property in Surfers Paradise. In
accordance with the contract, the buyers provided a deposit for the
purchase of the property to the sellers' agent by way of
Three days after signing the contract (and within the
cooling-off period), the buyers terminated the contract utilising
their cooling-off period rights and cancelled the personal cheque.
This occurred prior to the cheque being banked into the agent's
Agent seeks to recover termination fee from buyers
The agent sought to recover, on behalf of the sellers, the
termination fee that is potentially payable whenever a contract for
the sale of residential land in Queensland is terminated during the
cooling-off period solely utilising the cooling-off period rights
(and not by reference to any condition of the contract).
We note that the fee is not mandatory – it is a matter for
the seller as to whether the fee is charged.
Buyers argue that they are not required to pay the termination
In this instance, the buyers refused to pay the termination fee,
alleging that the termination fee can only be recovered where an
agent has received a deposit. The buyers claimed that:
as the buyers' personal cheque was cancelled, the agent had
not received the deposit
the buyers were not required to pay the termination fee
QCAT finds that termination fee must be paid
The QCAT held that the buyers' attempt to avoid paying the
termination fee by cancelling the deposit cheque did not remove the
buyers' liability to pay the termination fee.
QCAT found that the buyers were required to pay the termination
fee, plus costs, to the agent. The purchase price was $1,950,000,
giving rise to a termination fee of $4,875.
Steps Queensland buyers can take to try to avoid paying a
This case highlights the fact that buyers who do not pay a
deposit but terminate the contract utilising their cooling-off
period rights can still be charged the termination fee.
Rather than rely on cooling-off period rights, buyers should
consider attempting to negotiate the insertion of a special
condition into the sale contract, allowing termination, with no
penalty, for due diligence matters.
Alternatively, if the contract is subject to the buyer obtaining
finance approval or satisfactory building and pest reports (or
both), buyers may wish to terminate relying on their rights under
We point out, however, that terminating under these conditions
may require production of supporting evidence - for example, a
letter declining the provision of finance from a financial
institution, or a report concluding that extensive building and
pest matters have come to light.
For completeness, a buyer buying residential property in
Queensland at auction is not afforded the protection of a
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