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Buyer loses nearly 100k deposit in transfer delay
A property seeker in Queensland has lost both his deposit and the home he was hoping to buy after a 48-hour delay caused him to forfeit the payment to the seller.
In a Supreme Court of Queensland ruling, Stephen Gary Evans was ordered to forfeit his $98,500 deposit to vendor Yea Lan Jan after paying it two days late under a contract requiring 10 per cent on signing.
On 22 January 2024, Evans and Jan entered into a contract for a property in Logan’s Shailer Park, with a purchase price of $985,000 and a 10 per cent deposit, signing at different times.
On 23 January, the real estate agent emailed both parties and their lawyers to confirm that the property was under contract and requested the buyer pay the $98,500 deposit that same day.
Yet, Evans did not transfer the deposit that day.
According to the court paper, Evans said his bank requested him to physically go to a branch to increase his $50,000 threshold, which he “didn’t have time to do”, and did not transfer the money.
The next morning, 24 January, Evans transferred $45,000 into the agent’s trust account and texted an apology for the delay, explaining the remaining balance would be paid the following day due to bank difficulties.
The real estate agent acknowledged the message and replied via text “OK. As long as I let seller know. Two deposits today and tmr”.
The court heard that following the agent’s text, Evans didn’t hear anything further and proceeded with the building and pest inspection later that afternoon.
On 25 January, two days after having the contract in place, Evans deposited $50,000 into the agent’s trust account in two instalments of $40,000 and $10,000, while his brother contributed the remaining $3,500.
On January 28, the agent texted Evans that Jan no longer wished to sell to him and intended to cancel the contract.
The following day, on 29 January, Jan’s solicitors formally notified Evans that the contract was terminated for failure to pay the deposit on time.
Evans took the matter to the Supreme Court seeking to enforce the property sale.
He claimed he believed the realtor had full authority to act for the seller and, based on the text he received and with no contrary communication, assumed the seller had agreed to him paying the deposit over two days.
Evan told the court he would have arranged full payment on the 24th had it not been for that message.
Jan told the court she had never authorised the agent to approve a deposit extension and that her consent had never been sought, which ultimately led the court to rule that the realtor had no authority to alter the contract, leaving the original deadline in place.
The court also dismissed Evans’ claim, ruling that the funds transferred on January 24 and 25 did not satisfy the contractual requirement.
The court said that Jan was entitled to retain the deposit because the contract had been validly terminated when Evans failed to pay by the deadline.
The ruling reminded buyers to read their contracts thoroughly and understand the binding obligations of such purchases.
Online, Australians have expressed shock at the seller’s actions, arguing that the penalty was wildly disproportionate to the breach.
Many felt that once the money was received, there should be no grounds to cancel, calling the outcome simply unfair, adding that the results were not legally theft, but morally and ethically it was.
An anonymous Queensland agent said on social media that the late deposit shouldn't be grounds to terminate the sale, while another realtor said they had started adding extra days to buyers' deposits in the contract and had repeatedly reminded them to pay.
Contacted by SPI about extending the buyer’s deposit deadline, REIQ CEO Antonia Mercorella said that, although contracts have been regularly reviewed with the Queensland Law Society, no changes will be made following the ruling.
“At this time, we do not intend to update or amend terms surrounding deposit payments or time of the essence requirements,” Mercorella told SPI.
“The REIQ’s view is that contracts need to be entered into with the understanding that the obligations agreed to under the contract are binding. Not having a strict and enforceable deadline would undermine the contract and parties’ rights that are set out in the contract.”
According to Mercorella, buyers should seek legal advice before signing a property contract to fully understand their rights and obligations.
She said that buyers should ensure they understand the concept of “time is of the essence,” which requires strict compliance with deadlines; if ignored, it could result in contract termination, loss of deposits, and potential breach-of-contract claims.
While there’s no legal requirement to pay a deposit, Mercorella said that vendors commonly request one, and in Queensland could amount to up to 10 per cent of the property price.
“The time for payment of the deposit can vary. It may be due immediately upon signing the contract or, in some cases, it may be delayed until the satisfaction of a special condition (such as a pest and building report or finance) or some other date agreed between the parties.”
Additionally, Mercorella said that buyers needing an extension to meet their deposit obligations, or who wished to amend contractual terms, should always seek independent legal advice and ensure that any such changes are properly negotiated and documented.
“Informal conversations with real estate agents may not necessarily be relied on where the seller has not properly authorised or requested contract amendments,” she concluded.
