QLD Signed Property Contract but Offer Rejected - Am I at Risk?

[P Noob]

Under the stress of searching for a new home and with a lack of experience (but now I've had one) I recently made the mistake of signing a purchase contract for a property on the basis of it being a formal offer for the property. The property in question is in Queensland.

This is something the real estate agents, acting in the best interests of the vendor, convinced me was necessary for everyone placing an offer on the property that day (at least 4 other parties were likely present in relation to this property, probably being put into the same situation - whether they accepted this or not, I can't be sure)

Having not been through this process before, I do not know whether this is common practice or not.

The agent did not put a contract date on the contract, but my understanding is this would normally (or always) be the date the final party signs the contract.

The agent rang me the same night to advise that the vendor has accepted another offer. I thought this was the end of the story until I woke up the next morning and came to the realisation that I have signed a legal document which as far as I am aware could become binding at any time, if the vendor signs it (i.e. if they change their mind about the offer) - and I have no control over this.

Is my interpretation correct? Does the verbal rejection of my offer somehow invalidate the contract under contract law? Do I have some other course of action available to me, such as formally withdrawing my offer and requesting the contract be destroyed?

I do not want to find myself in a situation where I sign a contract for another property (on which I have made a successful offer) and some time after this, the seller of the original property does an about face and signs the contract, binding me to the purchase of both properties. In this instance I may have a number of ways to avoid the purchase of the initial property, some with financial penalty and some without, but with risk of legal recourse from the vendor.

Thanks in advance for any feedback on this matter. While I'm here to ask a question, as a layperson is there anything I can do to contribute to this forum?

 

[Rod]

Send an email to the real estate agent asap recounting your phone call with date/time where the vendor rejected your offer and say in your email 'OK, thanks for letting us know and by the way our offer is also rescinded with effect from the date/time of the phone call.' or words to similar effect.

 

[Rod]

Forgot to say the reasons why it is important to put something in writing:

1. Your offer is in writing, therefore the withdrawal should be in writing
2. Sometimes the party making an offer will keep an offer open in case the other party changes their mind. You do not want to be put in a position where the other party claims that is what you did in this instance. By sending the email you confirm the offer is no longer valid.

 

[P Noob]

Thanks very much Rod. Understood and done.

What I take from this is that a half signed contract can be invalidated through formal withdrawal of the offer.

I still don't know whether my experience is a common one but I suppose time will tell.

 

[Ivy]

Hi there,

When purchasing a property there is a difference between making an offer and signing a contract of sale. It sounds as though you have made an offer. Did you pay a holding amount? If you haven't paid any money (ie consideration) then it is unlikely the contract would bind you to purchase the property if the vendor accepted your offer. Have a look at the terms of the contract.

Even if you have signed a purchase contract, there is a five day cooling off period. Just email the Real Estate Agent to formally withdraw your offer.

I suggest that you contact a licenced conveyancer or solicitor before making another offer on a property.

 

[P Noob]

Hi Ivy,

It was definitely a purchase contract. I agree on the need to have such things reviewed by a solicitor and will be doing this in the future. I didn't pay a deposit. I have e-mailed the agent to withdraw the offer.

Yes there's a cooling off period, however in Queensland, cancelling during the cooling off period (which only starts once the contract is signed by all parties) can incur a penalty of 0.25% of the purchase price.

 

[Rod]

If you haven't paid any money (ie consideration) then it is unlikely the contract would bind you to purchase the property if the vendor accepted your offer.

A promise to pay is consideration. Money does not have to change hands for a valid contract to be formed though not sure if there are any exceptions in real estate contracts.

 

[Ivy]

Hi again,

Okay- yes having to pay .25% of the purchase price for cancelling during the cooling off period is the same as under NSW law.

Were you asked to sign the purchase contract upon your first inspection of the house, without having had time to read the contract and have your solicitor look over it? If so, that is incredibly unethical, and there was no way you had to do that. Also, the RE might have been in breach of their obligations to notify you of certain things about the property if you hadn't been in discussions beforehand...

You're lucky that the vendor accepted a higher price. You may have been able to get out of the contract anyway (depending on the circumstances) but it would have been a big headache.

Strong suggestion: see a solicitor or licenced conveyancer next time! Solicitors and licenced conveyancers have professional indemnity insurance which is a back up for you if they make a mistake.

@Rod, what constitutes consideration depends on the contract. There is no hard and fast rule.

 

[Ivy]

@Rod- to clarify, you are correct that a promise to pay can constitute consideration in terms of a contract of sale of property, however I wasn't sure what sort of contract had been signed and with what intention.

 

[Sophea]

I would say that by accepting another party's offer, the seller's conduct was consistent with rejecting your offer, and once the offer has been rejected they cannot come back and say that they want to accept it. However, I would also recommend in this case for the sake of prudence to submit a written revocation of your offer to the real estate agent, which I believe you have already done. This should defeat any need to rely on the cooling off period for which a fee is payable.