When a buyer or seller defaults on a Queensland contract: the remedies

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Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

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Most Queensland property contracts end the way they were meant to, with money and title changing hands on the agreed day. A small number do not. The buyer's funds are not there, or the seller cannot hand over what was promised, and the party who was ready is left holding a signed agreement that the other side has not honoured.

What that party can do next is set out in a single clause of the standard contract, clause 9, headed "Parties' Default". It is short and symmetrical, and it turns on one decision that has to be made early and cannot easily be unmade. This guide explains what the contract treats as default, the choice between keeping the contract alive and ending it, the remedies that follow each choice for sellers and for buyers, and the breaches that carry their own, narrower consequences. It quotes the first edition of the Contract for the Sale and Purchase of Residential Real Estate, published by the Real Estate Institute of Queensland and the Queensland Law Society and in use since 1 August 2025. It describes the general position and is not advice on any dispute.

REIQ and Queensland Law Society residential contract, first edition, clauses 9.1, 9.6 and 9.9; Queensland Law Society interest rates page, rate applying from 1 December 2025.

What the contract counts as default

Not every breach of a contract lets the other side end it. Clause 9.1 opens the default regime in two situations: where a party fails to comply with an essential term, or makes a fundamental breach of an intermediate term.

The contract lists its essential terms in the definitions. For the buyer they are clause 2.1, which is payment of the deposit, clause 3.1, which is payment of the balance of the price at settlement, clauses 3.2 and 3.3, which deal with tax withholding steps, clause 5.1, which requires settlement by 4pm on the settlement date, and clause 6.1, which makes time of the essence. For the seller they are clauses 3.2 and 3.3, clause 5.5(1), which lists what the seller must deliver at settlement, and clause 6.1.

In ordinary language, a buyer defaults by not paying the deposit on time or not paying the balance on settlement day. A seller defaults by not being able to deliver, on settlement day, a transfer capable of registration, releases of any mortgage or other encumbrance, and the other items clause 5.5 requires. Because clause 6.1 makes time of the essence, being late is itself the failure. There is no period of grace built into the definition.

The second limb, a fundamental breach of an intermediate term, is the contract's way of catching serious breaches of terms that are not on the list. Whether a particular breach is serious enough is a question of degree, and one for legal advice in the case at hand.

Clause 9.1 ends with a reminder that it is not the whole of the law: it does not limit any other right or remedy of the parties under the contract, at law or in equity.

The first decision: affirm or terminate

When a default occurs, the contract does not end by itself. The party who is not in default has a choice, and clause 9.1 names its two branches. The seller, in the case of the buyer's default, or the buyer, in the case of the seller's default, may affirm the contract or terminate it.

To affirm is to keep the contract on foot and insist that it be performed. To terminate is to bring it to an end and claim what the contract allows on termination. The two are inconsistent, so choosing one gives up the other.

The election is made by words or by conduct, and conduct is where people go wrong. A seller who knows the deposit is late and carries on as though nothing has happened, arranging access and discussing settlement, may be taken to have chosen to keep the contract. A seller who wants to preserve the right to terminate needs to say so, and to act consistently with it, promptly. For the same reason a party facing a default does well to take advice before replying to anyone, since a friendly message can settle the question without anyone intending it to.

If the seller keeps the contract alive

A seller who affirms after a buyer's default has the remedies in clause 9.2: the seller may sue the buyer for damages, for specific performance, or for both.

Specific performance is a court order that the buyer complete the purchase. It suits a seller who believes the buyer has the means to settle and who would otherwise face a falling market. It is also slower and less certain than it sounds, because it depends on court proceedings and on the buyer actually having the money.

More often, affirming is a short-term position. The buyer's lender is a day or two behind, the seller would prefer the sale to go through, and the parties agree a new date. Where that happens the contract's interest provision applies to the delay, as described below.

If the seller terminates

Termination is the more common response to a buyer who cannot settle, and clause 9.4 sets out what follows. A seller who terminates under clause 9.1 may do all or any of four things: resume possession of the property, forfeit the deposit and any interest earned, sue the buyer for damages, and resell the property.

The four are cumulative. Forfeiting the deposit does not prevent a claim for further loss, and clause 9.7 adds that the seller may claim damages for any loss suffered as a result of the buyer's default, including legal costs on an indemnity basis. That basis is more generous to the party recovering costs than the ordinary scale a court would otherwise apply.

Where the deposit was never paid, or was paid only in part, clause 2.1(5) lets the seller recover the unpaid part from the buyer as a liquidated debt. A buyer cannot escape forfeiture by never having paid in the first place.

The resale claim and its two-year limit

Clause 9.6 gives a terminating seller a ready-made measure of loss. If the seller terminates and resells, the seller may recover from the buyer as liquidated damages any deficiency in price on the resale, and its expenses connected with any repossession, any failed attempt to resell, and the resale itself. There is one condition: the resale must settle within two years of termination.

Liquidated damages are damages in a fixed or calculable sum. The clause spares the seller from having to prove market value at the date of breach; the price actually achieved on resale supplies the figure.

Law firm Bradley Bray, in a published explanation of failed contracts, illustrates the exposure with a buyer who agrees to pay $1.2 million and does not settle. If the property is resold for $1.1 million, the firm writes, the buyer could face the $100,000 shortfall plus the seller's extra rates, land tax and legal fees.

A second worked example shows the parts of the calculation. The figures are illustrative. A contract is signed at $900,000 with a deposit of $45,000, which is 5 per cent. The buyer does not settle and the seller terminates. Five months later the property is resold and settles at $840,000. The deficiency in price is $900,000 less $840,000, or $60,000. The seller's expenses of the resale, a second agent's commission, marketing and legal fees, come to $18,000. The amount clause 9.6 describes is $60,000 plus $18,000, or $78,000. How the forfeited $45,000 deposit is brought to account against that sum is a matter for the seller's solicitor and, if it comes to it, the court.

The two-year condition cuts both ways. It gives a seller ample time to resell in an orderly way. It also means a seller who takes the property off the market and resells three years later cannot use the clause, and would have to prove loss under the general law instead.

Interest on late money

Clause 9.9 deals with lateness that stops short of termination. The buyer must pay interest at the default interest rate on any amount payable under the contract that is not paid when due, and on any judgment for money payable under the contract. Interest runs from the date the amount was due until it is paid. Amounts of interest that fall due before settlement are paid by the buyer at settlement.

The rate is whatever figure is written into the reference schedule. If the box is empty, the schedule says the contract rate published by the Queensland Law Society at the contract date applies. The Society's interest rates page gives that rate as 10.84 per cent a year, simple interest, from 1 December 2025. It replaced a rate of 10.61 per cent that had applied since 1 April 2023.

A worked example gives a sense of the cost. The figures are illustrative. On the same $900,000 contract, the balance due at settlement after the $45,000 deposit is $855,000, ignoring adjustments. If settlement is completed three days late by agreement, simple interest at 10.84 per cent a year on $855,000 is about $254 a day, or about $762 for the three days.

The clause speaks only of the buyer. It reflects the fact that under a sale contract it is the buyer who owes money. A seller's delay is dealt with through the buyer's remedies, not through interest.

If the seller is the one in default

The buyer's remedies mirror the seller's. A buyer who affirms after a seller's default may, under clause 9.3, sue for damages, specific performance, or both. A buyer who terminates may, under clause 9.5, recover the deposit and any interest earned and sue the seller for damages. Clause 9.8 allows the buyer to claim damages for any loss suffered as a result of the seller's default, including legal costs on an indemnity basis.

For buyers, specific performance is frequently the remedy that matters. Bradley Bray's explanation notes that a buyer faced with a defaulting seller can seek specific performance to force the transfer of the land, and that courts favour the remedy because real estate is considered unique. Money does not put a buyer in the same position as owning the particular house.

A buyer pursuing that course usually also needs to protect the position on the title while the dispute runs. That is done by lodging a caveat, which is a subject in its own right.

Breaches with a remedy of their own

A large share of what goes wrong in a sale never reaches clause 9, because the contract gives particular breaches particular consequences. Knowing which is which prevents the most expensive mistake in this area, which is treating a small breach as a ground to walk away.

Missing a condition notice is the leading example. If the buyer does not give a finance notice by 5pm on the finance date, clause 4.1(3) lets the seller terminate and states that this is the seller's only remedy. The same wording appears in clause 4.2(4) for the building and pest condition. The seller may end the contract. The seller may not forfeit the deposit on that account.

The seller's warranties are another. Clause 7.4(3) allows the buyer to terminate before settlement if the seller breaches one of the warranties in clause 7.4(1) or (2), such as the warranty that there is no outstanding enforcement notice under the Building Act 1975. By contrast, clause 7.4(5) says that if the seller's warranty about rent increases on a tenanted property is incorrect, the buyer's only remedy is compensation.

Errors in the boundaries or the description of the property fall under clause 7.5. A material error lets the buyer terminate before settlement. An immaterial one, or a material one the buyer chooses to live with, gives a right to compensation only, and only if it is claimed in writing on or before settlement. The clause adds that the buyer may not delay settlement or withhold any of the price because of a compensation claim.

Two more are measured in money. If the seller has not complied with an undisclosed enforcement notice issued before the contract date, clause 7.6(2) lets the buyer claim the reasonable cost of complying from the seller after settlement as a debt. And if compliant smoke alarms are not installed by settlement, clause 7.9 gives the buyer an adjustment at settlement of 0.15 per cent of the purchase price, which on a $900,000 sale is $1,350.

The cost of terminating wrongly

Termination is a formal step and an unforgiving one. A party who purports to end the contract without the right to do so has, in effect, refused to perform it. The other side can then treat that refusal as a default and choose between the same two paths.

The Supreme Court illustrated how fine the margins can be in a decision discussed by law firm Attwood Marshall on 30 April 2026. A buyer's deposit was late, the selling agent had indicated that this was acceptable, and the seller terminated. The court found, in the firm's account, that the agent had no actual or ostensible authority to extend the deadline on the seller's behalf, and the buyer lost the deposit. The firm's advice to agents was that any change to a deadline has to come from the seller, through the solicitors, and not from the agent.

Two practical points follow. A party who intends to terminate should be ready, willing and able to perform their own side on the day, because a party who was not ready is poorly placed to complain of the other's default. And communications about deadlines belong between the parties' solicitors, in writing, so that there is no doubt later about who agreed to what.

Room to avoid a default

The contract gives the parties one tool for avoiding default at the last moment. Under clause 6.2 either party may extend the settlement date by giving notice nominating a new date, which must be no later than five business days after the scheduled settlement date. A buyer whose lender is not ready, or a seller whose mortgage release has not arrived, can use it without the other side's consent.

Anything longer requires agreement, and a party asking for an indulgence should expect terms: interest under clause 9.9 for the period of delay is a common one where the buyer is the party asking.

Where the money in dispute is the deposit, it does not move while the parties argue. An agent holding it in trust is bound by the Agents Financial Administration Act 2014, and an REIQ article of 9 February 2021 described the process in section 26 of that Act under which the agent notifies the parties of the dispute and a period of 60 days runs in which proceedings may be started.

Clause 9 gives the party who was ready a choice between holding the other side to the bargain and ending it. Everything else in the clause depends on which is chosen.

Default is rare, and in most cases it is resolved within days by an extension and some interest. The clause matters because it sets the terms of that conversation. A seller who knows the deposit can be forfeited and a shortfall claimed, and a buyer who knows a court can order a reluctant seller to complete, are both negotiating with a clear view of what happens if they cannot agree.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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