|
The legality of a rescission of the contract
by either the buyer or the seller is based in
both State Conveyancing legislation and the
common law of contract. Broadly, if the buyer
or seller place one another in a position where
the contract cannot be completed then the
contract may be rescinded. However, there are
stipulations placed on the situations where the
contract is considered untenable.
Buyer
There are limited circumstances in which a
buyer may rescind on a contract for the sale of
land. Recision on the sale has to be made in
writing to the seller within a certain
statutory period.
Recision of the contract is generally only
available to a buyer of land where the parties
are capable of being placed back in their
original positions before the contract was
made. However, this can be difficult when
intervening events have occurred such as the
securing of finance.
However, the buyer is broadly entitled to
rescind wherever there is a situation that the
seller of the property is unable to follow
through with the contract for the sale.
Consider the example of the sale of property
that has been illegally built on Council land
where such a building is prohibited. The sale
cannot proceed, as the seller is unable to
transfer good title to the buyer. In such a
circumstance, the contract becomes untenable
and the buyer may rescind from the
purchase.
Buyers are able to rescind in a variety of
other situations where the seller has breached
the terms of the contract or failed to answer
requisitions that has not enabled the sale to
finalise.
An example of a failure to reply to a
requisition is where the seller has failed to
disclose important information regarding the
nature of the property that, had the buyer
known, would not have reasonably entered into
the contract.
Seller
Yes, there must be a clause in the contract
that allows the seller to rescind on the
contract. However, this recision must be made
on the basis of 'reasonable grounds' and not be
an arbitrary or capricious act.
If a seller rescinds a contract without
reasonable grounds then a buyer can pursue a
legal remedy in the courts to recoup costs
incurred in the conveyancing process.
|
