QLD Deed of rescission Or variation of contract and can the seller refuse either

[Sandro Stewart]

Monday is meant to be settlement day for our purchase of a property but yesterday(Friday) our solicitor informed us that due to a mistake made by the realestate agent whendrafyong the contract that the seller is listed as a company but whilst conducting title checks it was found that the seller was in fact a trustee. The issue arises for us because we have been informed that because they are two legal entities if we were to go ahead and sign the contract on settlement day that we may if stayes and revenues were to assess the transaction, be liable for another set of stamp duties and interests. We were recommended to have a deed of rescission drawn up to easily fix this mistake however the sellers solicitors have flat out refused to compromise as they stated that there is no need for a deed of rescission, but rather they have offered a variation of contract ??? My solicitor isn’t answering her phone, I have no feedback or options and come 7am Monday I am expected to sign a settlement on a property which may or may not be very costly to us in the future all because the seller doesn’t feel like it. Please help

 

[Rob Legat - SBPL]

Doing a Deed of Variation is a lazy short cut and not suitable in this instance. There is a fundamental problem with your contract - the party that has contracted to sell the property has no legal standing to do so. The Queensland Treasury will consider this to be a double duty event (i.e. the real seller is transferring to the seller listed in your contract, and then on to you). From your perspective, you don't have certainty of contract as the party you contracted with is not the legal owner of the property. This creates various issues, not least of which is that if there is an issue with the property you don't have any standing to take action against the actual owner - only the contracted party.

The correct way to deal with the matter is to do a Deed of Rescission and enter into a new contract. If you have already paid transfer duty on the existing contract, an application will need to be made to the Queensland Treasury for a refund.

Really, this should have been picked up and dealt with right near the beginning of the contract period. The first search anyone should be doing is a title search, and comparing it to the contract. Since it seems this hasn't been done, I would wager that your solicitors are not following the Queensland Conveyancing Protocol laid down by the Queensland Law Society. Failure to do so is at their peril, as it is the first thing their professional indemnity insurer will look at.

 

[Sandro Stewart]

Doing a Deed of Variation is a lazy short cut and not suitable in this instance. There is a fundamental problem with your contract - the party that has contracted to sell the property has no legal standing to do so. The Queensland Treasury will consider this to be a double duty event (i.e. the real seller is transferring to the seller listed in your contract, and then on to you). From your perspective, you don't have certainty of contract as the party you contracted with is not the legal owner of the property. This creates various issues, not least of which is that if there is an issue with the property you don't have any standing to take action against the actual owner - only the contracted party.

The correct way to deal with the matter is to do a Deed of Rescission and enter into a new contract. If you have already paid transfer duty on the existing contract, an application will need to be made to the Queensland Treasury for a refund.

Really, this should have been picked up and dealt with right near the beginning of the contract period. The first search anyone should be doing is a title search, and comparing it to the contract. Since it seems this hasn't been done, I would wager that your solicitors are not following the Queensland Conveyancing Protocol laid down by the Queensland Law Society. Failure to do so is at their peril, as it is the first thing their professional indemnity insurer will look at.

Thank you for that, but the issue is that the sellers solicitors are flat out refusing to do a deed of rescission even after I offered to cover the sellers legal fee.

 

[Sandro Stewart]

Thank you for that, but the issue is that the sellers solicitors are flat out refusing to do a deed of rescission even after I offered to cover the sellers legal fee.

How can this be addressed when our settlement is at 7 am on Monday and our solicitor stated there is nothing we can do

 

[Rob Legat - SBPL]

Your settlement should not be at 7am, and I don't know what you mean by 'sign a settlement'. In over 20 years in dealing with property law I've never seen a settlement done at 7am - in fact I've never seen a settlement done earlier than the time the banks open. If it's done digitally (through PEXA), the earliest time they will allow a financial settlement is 9.30am. If it's under the standard REIQ contract, the settlement must occur between 9am and 4pm - and I cannot recall a settlement ever happening as early as 9am.

In any case, to put a hold on things you use all available means to communicate to your lawyer that she is instructed not to settle until she has spoken to you - such as leaving a message on an answering machine and sending an email to both the solicitor's email address and the office's general email address.

 

[Sandro Stewart]

Your settlement should not be at 7am, and I don't know what you mean by 'sign a settlement'. In over 20 years in dealing with property law I've never seen a settlement done at 7am - in fact I've never seen a settlement done earlier than the time the banks open. If it's done digitally (through PEXA), the earliest time they will allow a financial settlement is 9.30am. If it's under the standard REIQ contract, the settlement must occur between 9am and 4pm - and I cannot recall a settlement ever happening as early as 9am.

In any case, to put a hold on things you use all available means to communicate to your lawyer that she is instructed not to settle until she has spoken to you - such as leaving a message on an answering machine and sending an email to both the solicitor's email address and the office's general email address.

 

[Sandro Stewart]

You have already been a tremendous help, including validating a few things that I suspected. If the seller does not agree to a deed of rescission , firstly is he allowed to refuse and second, have I got any grounds to terminate the contract?

 

[Rob Legat - SBPL]

He can refuse, but he will likely be in breach of contract when he cannot complete in accordance with the contract's terms.

The standard REIQ contract (which is the only thing I can reasonably base an answer on without knowing any different) provides that one of the seller's warranties is that it will be the registered owner of the property at settlement - that means the seller named in the contract. If it isn't, you can terminate the contract.

 

[Sandro Stewart]

He can refuse, but he will likely be in breach of contract when he cannot complete in accordance with the contract's terms.

The standard REIQ contract (which is the only thing I can reasonably base an answer on without knowing any different) provides that one of the seller's warranties is that it will be the registered owner of the property at settlement - that means the seller named in the contract. If it isn't, you can terminate the contract.

Yes it is the standard REIQ contract that was used for this sale. I cannot thank you enough for your help. It is more than anyone has been able to to and makes us feel a little better going into Monday.

Can we be in breach of contract if we do not settle on settlement day?

 

[Rob Legat - SBPL]

That would depend on a range of factors and there's not enough to tell from here. Being in a position to tender (i.e. 'ready, willing and able' to settle) will overcome most issues. That means you can demonstrate that you are living up to your requirements under the contract and are therefore not the one in breach.