Two property purchasers in Richmond, Victoria, have learned the
hard way that giving notice to the real estate agent, rather than
the vendor, to terminate their residential purchase contract during
the cooling off period, was not sufficient.
What you need to know:
Read all contracts carefully, especially in relation to how to
Giving notice to a real estate agent is not necessarily
sufficient as termination in the cooling off period. When serving a
notice, serve it in the manner and on the person contemplated by
Do not assume that a real estate agent will legally be
considered the vendor's agent in all matters relating to the
On 4 April 2014 Mr Tan and Dr Lo signed a contract to purchase a
property in Richmond for $3.695 million. They paid $369,500 deposit
to the real estate agent.
In the afternoon Mr Gibbons (the real estate agent) called them
to say that another purchaser was interested and that they would
hold a private auction. Mr Tan and Dr Lo agreed to attend the
Ultimately Mr Tan and Mr Lo were successful at the private
auction and the contract was amended to a purchase price of $4.48
million with the remainder of the deposit ($99,000) due to be paid
at the end of June 2014. The vendor accepted their offer and
entered into the contract on those terms. The purchasers then had a
three-day cooling-off period. The auction exception to cooling-off
periods did not apply to this case, because this was a private, not
a public, auction.
On 9 April 2014 at 5:56pm, Mr Tan sent an email to the real
estate agent stating that they exercised their right to withdraw
from the contract pursuant to the cooling off period. He says he
also sent a text message and left a voicemail for the real estate
agent which was disputed.
Mr Tan and Dr Lo demanded a return of their deposit. The deposit
was not returned.
On 1 July 2014 the vendor's solicitor's served a notice
of default on Mr Tan and Dr Lo for failure to pay the remainder of
The Court's findings
In the Victorian Supreme Court (Tan v Russell  VSC
93), Mr Tan and Dr Lo had to demonstrate to the Court that the
real estate agent had authority that went beyond the established
authority that a vendor provides a real estate agent. The Court
held they did not establish this.
The Court therefore held that the real estate agent had no
authority to receive a notice of termination.
The vendor's notice of default on the contract was valid and
the vendor was entitled to the full deposit, damages and interest
from the purchasers.
In reflecting on this case, Catherine Ballantyne comments:
"This case is significant because it outlines the limits
of a real estate agent's agency, and dispels the commonly held
view that the real estate agent is the vendor's agent for all
matters relating to their property. It furtherillustrates
the importance of carefully reading the contract and ensuring that
you have the right legal advice to act according to the
requirements of the contract."
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.Madgwicks is a member
of Meritas, one of the world's largest law firm
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