Can You Back Out After Signing a Property Contract in Victoria?

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What Are the Legal Ways to Cancel a Signed Property Contract in Victoria?

Buyers have limited and strictly defined rights to withdraw after signing. The main options are:

🔹 1. Cooling-Off Period (for private sales only)

Under Section 31 of the Sale of Land Act 1962 (Vic), purchasers may rescind within 3 business days, with:

  • A penalty of $100 or 0.2% of the purchase price (whichever is greater)

  • The notice delivered in writing to the vendor or their agent

But no cooling-off period applies if:

  • The property was purchased at auction or within 3 days before/after one

  • The purchaser is a corporate entity

  • The purchaser has already signed a similar contract for the same property

🔹 2. Subject to Finance Clause

If your contract contains a valid subject to finance condition, you may rescind if:

  • You genuinely apply for finance

  • Finance is formally declined in writing

  • You notify the vendor promptly (typically by the finance due date)

Failure to comply with these timing and evidence requirements may invalidate your right to cancel.

🔹 3. Due Diligence or Special Conditions

Contracts may contain other escape clauses:

  • Subject to building and pest inspection

  • Subject to solicitor’s approval

  • Subject to sale of purchaser’s own property

These clauses must be carefully drafted and acted upon within the stated timeframes.

🔹 4. Rescission by Mutual Agreement

Vendors and purchasers may agree to rescind the contract—but:

  • This must be in writing

  • Release of deposit must be authorised by both parties

  • Terms such as forfeiture of deposit or payment of costs may be negotiated

What If You Just Don’t Want to Go Ahead?

Walking away without a valid contractual right can expose the purchaser to:

  • Loss of deposit

  • Default notices

  • Penalty interest

  • Legal action for damages

The vendor can seek to re-sell the property and sue for any difference in price, holding costs, and marketing expenses.

David Dawn’s Professional Advice

“Buyers should never sign a contract unless they’re absolutely ready—or they have a valid ‘subject to’ clause. Backing out isn’t just a change of heart—it’s a legal breach unless allowed under the contract.”

At Victorian Property Settlements, we:

  • Review contracts to ensure proper conditions are in place

  • Act quickly to notify vendors of rescission when time-sensitive rights apply

  • Negotiate mutual releases where relationships have broken down

Final Thoughts

Victorian buyers do not have automatic rights to change their minds. Cooling-off periods are limited. Subject-to conditions must be invoked properly. Always get professional advice before signing.

Unsure About a Contract You’ve Signed?

Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers.
📍 Based in Frankston, serving all of Victoria
📞 03 9783 0111 | ✉️ david@quick32.com
🌐 www.victorianpropertysettlements.com.au