Please note that this post was prepared before the changes to the standard REIQ contract made in early 2022, which changed the treatment of late payments in certain respects.
At any time and in particular in a heated property market the buyer must be careful to perform obligations under a land contract when they are due. An example of this is the obligation to pay the deposit.
Under the usual form of residential contract used in Queensland, there is a breach if the buyer pays any part of the deposit late. That breach can be grounds to terminate the contract and keep whatever part of the deposit has been paid. This is different to (say) late communication of the satisfaction of finance. The difference is that in the case of the late payment of the deposit, the seller may still be entitled to terminate even after it has received the deposit, whereas in the case of the late confirmation of acceptance of the finance condition, the seller’s right to terminate generally ends once satisfaction is confirmed (subject to the particular contract used).
So as a practical example, a Buyer is to pay a $100,000 deposit in two instalments – one of $10,000 two days after the contract date and one of $90,000 5 days after. He pays the first instalment on time, but misses the second. If the contract was terminated before he pays the second instalment, he loses $10,000. But if he pays the $90,000 on the seventh day (without agreement to extend from the Seller) then the Seller can still terminate and keep the whole $100,000.
There are a number of variables to this scenario, as examples the contract used, the wording of the deposit obligation, whether the Seller affirmed the contract or agreed to vary the obligation, but a lot of the drama and risk would have been avoided if the agreement of the Seller to extend the time for payment was obtained before making the second payment.
For advice in relation to contracts and their enforcement, please contact the property lawyers at QBM Lawyers – Peter Muller, Jessica Murray, and Megan Hanneman.
