Pulling out of a property deal isn’t as simple as walking away. Once the contract of sale has been executed, it becomes legally binding, and terminating during the transaction can lead to serious financial and legal consequences.
But what happens if only the buyer has signed? Let’s break it down.
Has the Seller Signed Yet? You May Still Withdraw
If you’ve signed the contract of sale but the seller has not, in this window, the buyer is still entitled to formally withdraw their offer if they are within cooling-off period.
This is a critical point many buyers overlook. Just because you have signed does not mean the deal is locked in unless and until the seller countersigns.
Once both signatures are in place, the contract becomes enforceable.
Cooling-Off Period: A Short Window of Flexibility
In most Australian states, a statutory cooling-off period is available after contracts are fully signed. This period generally ranges from 2 to 5 business days, depending on the state or territory.
During this time, the buyer can withdraw from the contract, although a penalty fee usually applies, typically 0.25 percent of the purchase price. Some buyers choose to waive this right, and in some cases, it may not be available at all (e.g. in auctions or in certain states for specific contract types).
After the Cooling-Off Period? Consequences Can Escalate
Once the cooling-off period expires, and no valid exit conditions are in place, pulling out of the contract may result in:
- Loss of your full deposit (commonly 10 percent)
- A potential breach of contract claim from the seller
- Liability for damages, particularly if the property is resold at a lower price
- Exposure to costly legal disputes, including litigation
At this point, the buyer cannot simply “walk away” without facing legal and financial fallout.
Valid Exit Clauses Offer Protection
Buyers can often include special conditions in the contract that allow for a lawful exit. These may include:
- Subject to finance
- Subject to pest and building inspection
- Subject to satisfactory legal contract review
- Subject to valuation or sale of the buyer’s current property
These clauses must be correctly drafted and agreed upon before the contract becomes binding. That’s why getting legal advice before signing is essential.
Avoid Mistakes: Always Speak to a Lawyer or Conveyancer First
Feeling pressure from an agent to “get it signed”? Stop and get advice first. Having a solicitor or conveyancer review the contract before you sign can help protect your deposit, ensure your exit rights are preserved, and flag any risks you may not see coming.
Final Thoughts
Signing a contract is a serious commitment. While some protection exists, there is a very small window to change your mind and after that, your options become limited and expensive.
If you’re unsure or feeling rushed, speak to a property lawyer before putting pen to paper. It could save you thousands in penalties, stress, and legal costs.
Do you have a contract ready for our review before you sign?
At Bond Property Lawyers, we offer two complimentary contract reviews for all referred clients. We will guide you through the fine print and protect your best interests from the start.
📞 1300 039 559
📧 hello@bondc.com.au