Can a Buyer Pull Out After the Contract Is Signed, and What Penalties Apply on the Gold Coast?
If you’ve received a signed contract for your Gold Coast property, you’re likely breathing a sigh of relief. But here’s a common concern many sellers ask me:
“Can the buyer still pull out after signing the contract?”
The short answer is: Yes, but only in certain circumstances—and there are often penalties involved.
✅ Understanding the Contract of Sale in Queensland
In Queensland, once a buyer signs the contract of sale and both parties have executed it, the contract becomes legally binding—but there’s still a 5-business-day cooling-off period (unless waived).
The standard REIQ contract used for most residential sales in Queensland outlines all the key terms, conditions, and buyer rights, including the ability to terminate under specific clauses.
❄️ The 5-Day Cooling-Off Period (Buyer’s Right)
What is it? Under Queensland law, a buyer has 5 business days from receiving a copy of the signed contract to terminate the agreement for any reason—even if they just change their mind.
Can the buyer cancel without penalty? No. If the buyer uses the cooling-off period to withdraw, they’ll be required to pay the seller a termination penalty of 0.25% of the purchase price.
For example:
- $1,000,000 property = $2,500 penalty to the seller.
This gives the seller some compensation, but it doesn’t cover emotional stress or lost time—especially if you had other offers on the table.
⚠️ Other Reasons a Buyer Can Legally Pull Out
Beyond the cooling-off period, a buyer can only withdraw without penalty under specific contract conditions:
1. Finance Clause (Usually 14-21 Days). If the contract is subject to finance and the buyer is unable to secure their home loan within the agreed time, they can terminate—but they must provide written proof from their lender.
💡 Tip: You can negotiate shorter finance periods to reduce uncertainty.
2. Building & Pest Inspection (Typically 7–14 Days). If the buyer discovers significant structural issues or pest infestations during their inspections—and the contract is subject to this clause—they can either:
- Request repairs,
- Negotiate a price reduction, or
- Terminate the contract.
📌 Minor defects are not usually grounds for termination—only serious or costly issues.
3. Other Special Conditions
Contracts can also include:
- Subject to sale of buyer’s property
- Subject to legal review
- Subject to body corporate records being satisfactory
If the buyer’s solicitor flags any issues during these periods, they may terminate without penalty.
🚫 When Can’t a Buyer Pull Out?
Once the cooling-off period ends, and all conditional clauses are satisfied, the contract becomes unconditional. At this point:
- The buyer cannot pull out without serious legal or financial consequences.
- If they do, they may be in breach of contract, and the seller may be entitled to:
- Keep the deposit (usually 5–10%)
- Claim damages
- Resell the property and sue for any loss in value
💰 What Happens to the Buyer’s Deposit If They Default?
If the buyer fails to complete the settlement without valid grounds:
- The deposit is forfeited to the seller.
- You may also be able to seek compensation if you sell the home for less in a resale.
- Your conveyancer or solicitor will guide you through issuing a notice to remedy breach, which starts the legal process.
🛡️ How Sellers Can Protect Themselves
Here’s how to reduce the risk of a buyer backing out:
- Pre-qualify your buyer – Ask if they have pre-approval in place.
- Negotiate strong conditions – Keep timeframes tight for finance and inspections.
- Use a skilled conveyancer – They’ll draft a watertight contract and handle any termination attempts.
- Avoid unnecessary delays – Buyers are more likely to walk if a sale drags out.
- Stay in touch – A responsive agent can keep momentum going, and identify red flags early.
⚖️ What Should Sellers Do If a Buyer Tries to Pull Out Illegally?
- Contact your solicitor or conveyancer immediately.
- Issue a formal breach notice (if the buyer has gone unconditional and defaults).
- Consider re-marketing the property—but only after legal advice.
- Document all communication for potential future claims.
🙋♂️ Thinking of Selling? I’ll Guide You Through the Process
Selling your property isn’t just about finding a buyer—it’s about finding the right buyer who can settle on time without surprises.
- Vetting buyers early
- Drafting smart, protective contracts
- Navigating legal hiccups when they arise
Let’s talk about how to safeguard your sale and secure the best outcome.
✅ FAQs
1. Can a buyer cancel after signing the contract?
Yes, during the cooling-off period or under specific contract conditions like finance or building & pest.
2. What is the penalty for pulling out during the cooling-off period?
The buyer must pay 0.25% of the purchase price to the seller.
3. Can I keep the deposit if the buyer backs out late?
Yes—if the buyer defaults after going unconditional, the deposit is usually forfeited.
4. What happens if a buyer delays settlement?
You may charge penalty interest, or issue a notice to complete, depending on the delay.
5. How do I prevent a buyer from backing out?
Use tight contract conditions, work with an experienced conveyancer, and ensure the buyer is financially ready.
More Smart Seller Questions Answered
Gold Coast Home Selling Costs Calculator: Know Before You List
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That’s why I created the Gold Coast Home Selling Costs Calculator—a free, easy-to-use tool designed to give you clarity before you commit. It’s tailored to local conditions and helps you avoid hidden surprises, so you can plan your next move with confidence.
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Author – Craig Douglas
Please Note: The information contained in this document is for general information purposes only and does not constitute legal advice. The laws and regulations governing the sale of property in Queensland are complex and constantly changing. It is important to seek the advice of a qualified property lawyer or conveyancer before making any decisions about the sale of your property. This document does not take into account your individual circumstances and may not apply to your situation. By reading this document you agree that you have not relied on the information contained herein and that you will seek independent legal advice before taking any action.
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This page was proudly created by Craig Douglas, your local independent Gold Coast real estate agent, working for a Boutique Real Estate Agency. Selling residential and commercial properties, from those that are awe-inspiring, through to a diamond-in-the-rough, otherwise known as a “renovator’s delight”.
I negotiate and sell on behalf of property owners who want to get the best possible price, with the least amount of hassle. Let’s talk about the process of selling your property over a coffee to get you started – 0418 189 963
