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ARTICLE · 28 MARCH 2018

Who keeps the deposit when a property sale falls through? Which case won?

Stacks Law Firm
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Analysis of case where property sale fell through after issues with a special condition that needed to be met before completion. .

AustraliaReal Estate and Construction
Tony Mitchell
Tony Mitchell
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The Facts

Property owner enters into contract to sell parcel of land

A parcel of land in Fairfield, Sydney, was sold at auction for $1.46 million. The buyer and seller entered into a contract for sale and the buyer paid a 10 per cent deposit of $146,000. The contract stated that the "completion date" was to be 20 June 2015.

Some time prior to entering into the contract, the seller had performed earthworks on the property. The local council had declared the earthworks illegal and issued an order requiring that the seller reinstate the property to its previous condition.

By a special condition contained in the contract, the seller agreed to reinstate the property as required by the order "before completion". The contract stated that the buyer would be entitled to terminate the contract and be repaid the deposit if the seller failed to do so.

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