Can You Pull Out After Signing a Property Contract in Australia?

Yes, it is possible to pull out after signing a property contract in Australia — but your options, timing, and financial consequences depend heavily on where you are in the process and which state or territory you are buying in. The most common and straightforward way to withdraw is during the cooling-off period, but there are other limited grounds even after cooling-off has expired.

This guide explains every scenario where you can legally withdraw from a signed property contract, the financial penalties you may face, and when you absolutely need legal advice.

Option 1: The Cooling-Off Period

The cooling-off period is your primary safety net after signing a property contract. Most Australian states and territories provide a short window (typically 2 to 5 business days) after exchange during which you can rescind the contract for any reason, subject to a small financial penalty.

The penalty is usually 0.25% of the purchase price — for example, $2,500 on a $1,000,000 property. While losing that amount is not ideal, it is far less costly than being locked into a property you cannot afford or do not want.

For a detailed breakdown of every state's cooling-off rules, see our comprehensive guide to cooling-off periods in Australian property law.

When Cooling-Off Does Not Apply

There are several situations where you will not have the protection of a cooling-off period. Understanding what happens at exchange of contracts is critical to knowing your rights:

Properties Purchased at Auction

In every Australian state and territory, the contract is unconditionally binding from the fall of the hammer at auction. There is no cooling-off period. This is why it is critical to complete all due diligence — including contract review, building inspections, and finance pre-approval — before auction day.

Cooling-Off Was Waived

In competitive markets, buyers sometimes waive their cooling-off rights by having their solicitor issue a waiver certificate (such as a Section 66W certificate in NSW or Section 31 certificate in Victoria). Once waived, the contract is immediately binding, and you cannot withdraw under cooling-off provisions.

Cooling-Off Has Expired

If the cooling-off period has passed and you did not exercise your right to rescind, you are contractually bound. However, there may still be other grounds for termination, as discussed below.

Other Grounds for Terminating the Contract

Even after cooling-off has expired, there are limited circumstances where you may be able to legally terminate the contract:

Subject-to Conditions Not Met

Many property contracts include subject-to conditions that must be satisfied for the contract to proceed. The most common are:

• Subject to finance: If your loan application is formally declined by your lender within the timeframe specified in the contract (usually 14-21 days), you can typically terminate the contract and have your deposit returned in full. You must provide evidence of the finance rejection and follow the notice requirements exactly. For more detail, see our guide on the subject to finance clause and our glossary entry on what a finance clause is.
• Subject to building and pest inspection: If the inspection reveals significant defects that are unacceptable to you, you can terminate the contract within the inspection period. The contract wording matters — some clauses only allow termination for "major structural defects," while others give broader discretion.
• Subject to sale of existing property: If you need to sell your current home first, this condition allows you to withdraw if your existing property does not sell within the specified timeframe.

Breach by the Vendor

If the vendor breaches a material term of the contract, you may have grounds to terminate. Common examples include:

• The vendor cannot deliver clear title (e.g., there are undisclosed encumbrances, caveats, or liens on the property)
• The vendor fails to disclose required information (such as a Section 32 vendor statement in Victoria or a Section 149 planning certificate in NSW)
• The property has been materially damaged between exchange and settlement (e.g., fire, flood, or storm damage)
• The vendor cannot settle by the agreed date

Defective Vendor Disclosure

In several states, the vendor is legally required to provide certain disclosures before or at the time of exchange. In Victoria, for example, the vendor must provide a Section 32 statement (vendor statement) that includes title details, planning information, owner-builder warranties, outgoings, and more. If the Section 32 is materially defective or missing required information, the buyer may have a right to rescind the contract.

Similarly, in NSW, a defective or incomplete contract that does not include mandatory annexures (such as the zoning certificate, sewer diagram, or title search) may give the buyer grounds for rescission. This is why having your contract reviewed for red flags is so important.

Misrepresentation or Misleading Conduct

Under the Australian Consumer Law, a buyer may be able to rescind a contract if the vendor or agent engaged in misleading or deceptive conduct. This could include:

• Deliberately concealing major defects (e.g., covering up water damage, structural cracks, or termite damage)
• Misrepresenting the property boundaries or land size
• Falsely representing planning approvals or development potential
• Providing false information about rental income or body corporate levies

These claims can be difficult to prove and typically require legal proceedings. You should gather all evidence (written communications, listing descriptions, photographs) and seek legal advice immediately.

Financial Consequences of Pulling Out

The financial cost of withdrawing from a property contract depends on when and how you do it:

During the Cooling-Off Period

You will forfeit the statutory penalty (usually 0.25% of the purchase price). The remainder of any deposit you have paid will be refunded. This is the cheapest way to exit a contract.

Under a Subject-to Condition

If a genuine subject-to condition is not met and you follow the contract procedures correctly, your full deposit should be refunded with no penalty. However, you may still be out of pocket for costs you have already incurred (e.g., building inspection fees, legal fees, loan application costs).

After Cooling-Off With No Valid Grounds

• Loss of your entire deposit: Typically 5-10% of the purchase price. On a $1,000,000 property, that is $50,000 to $100,000.
• Vendor's losses: The vendor may sue you for additional damages, including the difference between your contract price and the price they eventually sell the property for (if it is lower), plus holding costs like mortgage interest, rates, and insurance.
• Legal costs: You may be liable for the vendor's legal costs in addition to your own.
• Agent's commission: In some cases, the real estate agent may claim their commission from the forfeited deposit.

State-by-State Summary

When You Need Legal Advice

While minor issues might be resolved during the cooling-off period without legal involvement, you should seek legal advice immediately if:

• The cooling-off period has expired and you want to withdraw
• You believe the vendor has breached the contract
• You suspect misleading conduct or misrepresentation by the vendor or agent
• The vendor's disclosure documents (e.g., Section 32, contract annexures) appear incomplete or inaccurate
• You are unsure whether a subject-to condition has been triggered
• The vendor is threatening to forfeit your deposit or sue for damages
• You purchased at auction and are now unable or unwilling to complete

A property solicitor or conveyancer can review your specific situation, advise on your legal position, and negotiate with the vendor on your behalf. The cost of legal advice is almost always far less than the cost of losing your deposit or facing a damages claim.

How to Protect Yourself Before Signing

The best way to avoid needing to pull out of a contract is thorough preparation before you sign:

Use our guide to reading property contracts and check for property contract red flags before committing.