By Brendan Leahy, Naked Real Estate
You have signed the contract. Finance is sorted. Settlement is a few weeks away. Then something changes. A buyer decides the move no longer feels right. A seller has second thoughts about leaving the family home. A bank is running late.
Here is the short version. Changing your mind is not, by itself, a legal reason to end a property contract in Western Australia.
Once an Offer and Acceptance has been signed and acceptance communicated, it is generally a binding contract. There is no automatic cooling-off period for an ordinary residential contract in WA unless the buyer and seller have specifically negotiated one into the contract themselves. If the contract contains a condition that has not been satisfied, that is a different conversation. But where the contract is unconditional, or every condition has been met, neither side can simply announce a change of heart and walk away without financial and legal consequences.
This article is general information only and is not legal advice. There are a lot of variables, and the special conditions written into your particular contract can change the outcome completely.
What this guide covers
- Read this first: your special conditions matter more than this article
- The three situations, and why they are not the same
- Situation one: settlement is delayed
- Situation two: the finance clause
- Situation three: someone refuses to complete
- The fight over the deposit, and how it is supposed to work
- Can both sides just agree to cancel?
- Sometimes settling and reselling is the least damaging option
- Before you sign, you are still in control
- What to do if you think you cannot settle
- Frequently asked questions
Read this first: your special conditions matter more than this article
Everything here is drawn from the standard forms used in Western Australia: the Offer and Acceptance, and the Joint Form of General Conditions that sits behind it.
But those General Conditions apply to your contract only so far as they are not varied by or inconsistent with the conditions and special conditions of your particular contract. Where there is a conflict, your contract wins. The standard conditions say this themselves: where a provision of the individual contract is inconsistent with them, the individual contract takes priority to the extent necessary to remove that inconsistency.
That is not a technicality. It is the single biggest reason two people can read the same article and get different answers. A special condition can extend a date, change a notice period, add an obligation, remove a right, or create a termination right that does not exist in the standard form at all. Annexures do the same. So use this guide to understand how the system works and what questions to ask. Do not use it to diagnose your own contract. Read your contract, and get your own legal advice on it.
The three situations, and why they are not the same
Almost every “can I get out of it” conversation is really one of three situations, and the rules are different for each.
One, a delay, where both parties still intend to complete. A slow bank, a mortgage discharge that has not come through, documents not returned. This is a money question, not a survival question.
Two, a finance condition that has not been resolved. The finance date has passed and no notice has been given either way. This works differently to everything else in the contract, and it catches more people out than anything else.
Three, a refusal to complete. One party has decided they are not going ahead. This is where default notices, termination, forfeiture and resale come in, and where the numbers stop being predictable.
The contract treats these three separately. So should you, and so should anyone advising
you. The rest of this guide summarises each, and links to a full article on each one.
Situation one: settlement is delayed
Settlement is due on the agreed date, and time is of the essence. If settlement is not completed within three business days after the settlement date for a reason not attributable to the seller, the buyer must pay the seller interest on the balance and any other money payable at settlement. If the delay is attributable to the seller, the seller allows the buyer compensation on the same basis. Those are deliberately different tests, so a buyer can end up paying interest for a delay that was nobody’s fault in particular, or caused by their own bank.
The prescribed rate under the 2022 General Conditions is 9 per cent per annum calculated daily, not 9 per cent per day. On a $1.15m balance that is about $284 a day, so a two-week delay is roughly $3,970. Importantly, where the sale still completes, that interest is generally the whole claim for the delay, not the start of a list, so a frustrated party usually cannot stack removalist and accommodation costs on top.
A delay is about money, not about the contract ending. Nothing in the delay provisions cancels the contract.
Read the full guide: What happens when settlement is delayed in WA for the exact process, the “ready, willing and able” rule, how electronic settlement changes things, and the worked numbers.
Situation two: the finance clause is an obligation, not a safety net
A lot of buyers treat a finance condition as a way out. It is not. Under the current Offer and Acceptance, the buyer must apply for finance immediately after the contract date, use all best endeavours in good faith to obtain approval, and immediately tell the seller whether finance was approved or rejected.
Here is the trap. If the buyer does not apply as required, does not use best endeavours in good faith, or does not give notice once approval comes through, the contract does not end under the finance clause and the buyer cannot terminate under it either. The seller’s rights are not affected. A buyer who sits on their hands does not get released. They lose the protection of the clause and stay bound, while the seller keeps every right. And if neither an approval nor a non-approval notice has been given once the finance date passes, the contract stays in full force, and the seller can terminate in writing at any time while that continues.
Read the full guide: The finance-clause trap that catches WA buyers out for what counts as approval, why some conditional approvals are not “finance approval” under the contract, the seller’s right to check on your application, and what to do at each deadline.
Situation three: someone refuses to complete
A delay is one thing. A refusal is another, and it moves out of the interest provisions into default and termination, where the money stops being calculable.
Nothing happens automatically. A contract does not die on its own because someone misses a date. Neither party may terminate for the other’s default, and a seller may not forfeit a deposit or retake possession, unless a Default Notice has been given and the default not remedied within the time required, generally ten business days. The one exception is repudiation, where a party makes clear they do not intend to be bound. And a Default Notice only supports termination if it states that the contract may be terminated if the default is not remedied, a trap that catches sellers who draft their own.
After a valid termination, the seller’s rights sit alongside each other, not as alternatives: forfeit the deposit (only up to 10 per cent of the price), sue for damages, and resell. If the property is resold within twelve months, a liquidated-damages mechanism can require the original buyer to pay the shortfall. Walking away from a large contract can create a liability many times the size of the deposit.
Read the full guide: What happens when a buyer or seller refuses to complete in WA for the default process, specific performance explained properly, the seller’s and buyer’s options, and the resale arithmetic worked through.
The fight over the deposit, and how it is supposed to work
When a contract falls over, the argument almost always lands on the deposit, and there is a specific process almost nobody knows exists.
The deposit is held by the deposit holder as a stakeholder. It is not the seller’s money and not the buyer’s until the position is resolved. If a party says the contract is terminated and they are entitled to the deposit, they serve notice on both the deposit holder and the other
party. The other party then has five business days to serve a notice disputing it. If no dispute notice arrives, the deposit holder pays the claimant after eight business days. If a dispute notice does arrive, the deposit holder can obtain legal advice, start interpleader proceedings, and deduct those legal costs from the deposit itself. That last part deserves emphasis: fighting over a deposit can shrink the deposit.
I had a matter where a buyer’s finance was declined and the deposit fell to be dealt with. The seller had been reading material online and instructed us not to release it. The deposit
was $10,000. It escalated, the buyer engaged a solicitor, I checked with my own solicitor to be sure we had not missed anything, and the seller’s position was wrong. Once the seller finally got proper advice, the deposit was released to the buyer and the seller paid about $8,500 towards the buyer’s legal costs. A dispute over releasing $10,000 ended with the buyer getting the $10,000 anyway and the seller roughly $8,500 worse off. The problem was not that the internet exists. It was using general or outdated information to override the current contract, and getting advice only after the cost had been incurred.
One more point. If a buyer does not pay the deposit at all, or pays by a cheque that is dishonoured, that sits outside the usual default process. The seller can give notice requiring payment within 48 hours, and if that is not met the buyer is in default and the seller may terminate. That is a much shorter runway than the ten-business-day default process.
Can both sides just agree to cancel?
Yes, sometimes, and this is the exit people usually should be asking about and rarely do. A binding contract can be ended by properly documented mutual agreement. If a buyer’s circumstances have genuinely changed, they can ask, and the seller may agree to release them on terms, which might include the seller retaining all or part of the deposit, a contribution to costs, an agreed release date, and each party releasing the other from future claims.
Three things to understand. The seller is not obliged to agree to anything; a release is a negotiation, not a right. The agreement has to be recorded properly, which is legal work, and each party should get independent advice. And the agent’s role here is to communicate, not to draft. I can carry the message and be straight with both sides about the practical position. I should not be drafting a legal release or advising either side about giving up contractual rights. That is not me being unhelpful. It is me staying in my lane so the document you end up with actually holds.
Sometimes settling and reselling is the least damaging option
This sounds counterintuitive. I have dealt with buyers who no longer wanted to proceed even though finance was approved and there was no right to terminate. In one case the change was driven by family circumstances. My advice was to get legal advice, complete the purchase, and put the home straight back on the market. The property resold quickly. They still carried costs, including the selling fee and the transfer duty already paid, but the resale covered a meaningful part of it, and it was finished in weeks.
Compare that to a refusal to settle: a default notice, a termination, a resale controlled entirely by the seller, a claim for the shortfall, and legal costs, over months, with an uncertain number at the end. Nobody wants to buy a house in order to sell it, but the least
expensive way out of a binding purchase is sometimes to honour it, take ownership, and move on quickly. The duty, tax, finance and legal consequences all need working through with your lawyer and financial adviser, but it is an option worth putting on the table early, because it is often the one nobody has thought of.
Before you sign, you are still in control
There is an enormous difference between thinking about an offer and being bound by an accepted one. Before you sign you can take time, get advice, talk to your broker, investigate the property, adjust your conditions, or decide not to proceed at all. After the contract becomes binding, your choices narrow dramatically.
Under the current Offer and Acceptance, acceptance is sufficiently communicated when the accepting party, their representative or the agent gives verbal or written notification that the accepting party has signed. Until that happens, there is no contract, and a buyer can withdraw their offer. I have watched sellers learn this the hard way. I once presented a cash offer of $1.5m in a difficult market, a strong offer at the time. The sellers wanted to sleep on it, which was entirely their right. By eight the next morning the buyer had withdrawn, and the property took another eighteen months to sell for the same price. There was nothing improper about it. But until acceptance is communicated, there is no deal to honour. Taking the time you need to make a clear decision is sensible. Assuming the offer will still be there tomorrow is not.
What to do if you think you cannot settle
Act immediately. Do not wait for settlement day and do not go quiet. Almost every bad outcome I have seen was made worse by delay and silence.
If you are the buyer: contact your settlement agent today, contact your lender or broker, tell the agent what is happening, get independent legal advice, work out honestly whether this is a temporary problem or a refusal to complete because they are treated very differently, and ask your lawyer about the realistic options, including an extension, a mutual release, or settling and reselling.
If you are the seller: contact your settlement agent today, start or chase the mortgage discharge, tell your selling agent, get legal advice before refusing access, withholding documents, refusing to release a deposit or issuing any notice, do not assume you can keep the deposit or terminate without following the contract, and keep written records of every instruction and notice.
The earlier a problem is raised, the more options remain. That is the whole game.
One carve-out worth knowing
Everything above is written for an ordinary residential sale of a freehold property. If you are buying a strata lot, a proposed strata lot, or an off-the-plan property, there are separate rights to terminate that come from the strata legislation rather than the contract, and they sit alongside your contractual rights. The general picture here is still useful, but do not assume the answer is the same. Ask your settlement agent or lawyer specifically about the strata position.
Frequently asked questions
Can a buyer change their mind after signing an Offer and Acceptance in WA?
Not merely because they have changed their mind. There is no automatic cooling-off period for an ordinary residential contract in WA. A buyer may have a right to terminate under the finance clause, a special condition, an annexure or another legal right, but they should get advice before acting on any of them.
Can a seller change their mind after accepting an offer?
Generally not, where a binding contract has been formed and the buyer is complying with it. A seller who refuses to complete may face a claim for damages or an order compelling the sale to proceed.
Does a WA contract end automatically if settlement is three business days late?
No. The three-business-day period relates to interest and compensation, not to the contract ending. Termination generally requires the default-notice process, unless there has been repudiation or another specific right applies.
Is the late-settlement rate 9 per cent per day?
No. Under the 2022 General Conditions the prescribed rate is 9 per cent per annum, calculated daily.
If the buyer defaults, does the seller automatically keep the deposit?
No. The seller has to follow the contract, which generally means a valid default notice and a valid termination before the deposit can be forfeited. Repudiation is treated differently.
Does the finance condition end the contract automatically when the date passes?
No. If neither an approval nor a non-approval notice has been given, the contract remains in full force until the seller terminates in writing or the buyer gives a valid non-approval notice. The seller can terminate at any time while that situation continues.
Can the buyer and seller agree to cancel?
Yes. They can enter a written mutual release on agreed terms. Neither side is obliged to agree, and each should get advice before giving up contractual rights.
Do the special conditions in my contract change any of this?
They can, completely. The General Conditions apply only so far as they are not varied by or inconsistent with your contract’s own conditions and special conditions, and your contract takes priority where there is a conflict. Read your contract and get advice on it.
The bottom line
Western Australia’s Offer and Acceptance system is designed to create a clear, enforceable agreement, and that certainty is genuinely valuable. A buyer can plan their life around the home they have bought, and a seller can make decisions knowing the property is sold. But certainty cuts both ways, so neither side should sign casually.
Before you sign, ask your questions, take advice, and make sure your finance and settlement arrangements are realistic rather than hopeful. After acceptance has been communicated, changing your mind is not an exit strategy. And if a settlement problem appears, get independent legal advice straight away. In this area the cost of advice is almost always smaller than the cost of finding out late.
After more than 1,500 personal sales, my advice comes down to one line. If in doubt, do not sign until you understand the contract. Once you sign and it becomes binding, expect to honour it.
Truth. Strategy. Sold.
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About the author: Brendan Leahy has been selling homes throughout the Perth Hills and Foothills since 2002, with more than 1,500 personal sales.
This article provides general information only and is not legal advice. Every contract and every default is different, and the special conditions and annexures in your own contract can change the outcome entirely. If settlement may be delayed, if a party wants to withdraw, or if a default notice is being considered, get advice from a property lawyer immediately.
