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ADHERE TO CONTRACT DATES OR LOSE YOUR NEW PROPERTY

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By Belinda Pinnow, Solicitor

A recent decision of the Queensland Supreme Court has reiterated the need for buyers to ensure they comply with critical dates to avoid missing out on their prospective new property.  In the case of Simpson & Ors v Jackson [2014] QSC 191, Ms Simpson and others (as buyers) entered into a standard REIQ contract with Mr Jackson (as seller) dated 23 November 2013 to purchase a residential property at Newport in Queensland.

The contract was conditional on the buyers obtaining and being satisfied with building and pest inspections (and providing notice to the seller to that effect, or, in the event they were unsatisfied, terminating the contract) by 5:00 pm on 9 December 2013 (the Due Date).  If notice was not provided by 5:00 pm on the Due Date, the seller could, after 5:00 pm terminate the Contract by written notice to the buyers’ solicitor.

The buyers’ solicitor sent the notice stating that the buyers were satisfied with their building and pest inspections at 4.57 pm on the Due Date to the real estate agent and not to the seller’s solicitor named in the contract.   Having not received any notice, at 5.06pm or5.07pm on the Due Date the seller’s solicitor terminated the contract. 

At 5.06pm or 5.07pm the buyers’ solicitor sent a copy of the notice sent to the agent, along with the facsimile receipt showing the time stamp of before 5pm on the Due Date to the seller’s solicitors and subsequently pursued the seller for an order requiring the seller to complete the contract and lodged a caveat over the property pending an order from the court.

At trial, the buyers argued that the seller and the buyers had served the notices simultaneously and that the seller’s termination was invalid.  The court held that the seller had validly terminated the contract. 

The court found that both notices were held to have been served on the next business day and that the contract provided specific rights, namely, that if the buyers had not provided notice by 5:00 pm on the Due Date the seller had a right to terminate – a party who has a right to terminate should be able to do so without fear that it will be turned back on them at some future point.  In this case the court could not be satisfied that the buyers’ solicitor had sent the notice prior to receiving the facsimile from the seller’s solicitor. 

This case shows that buyers need to be aware of their critical dates (not just building and pest but also finance and due diligence and any others as applicable) and provide instructions to their solicitors in advance of the 5pm deadlines to avoid the seller terminating the contract.  Real estate agents who receive notices should also ensure that a copy of the notice is provided to the seller (and if represented, their solicitor) by 5:00 pm on the relevant due date. 

If you have any questions, please feel free to contact McNamara & Associates on 1300 574 974.  This article should not be used in the place of specific legal advice and is a summary only.