← Back Sellers · Legal · 6 min read

What Happens When a Buyer Defaults After Going Unconditional in Queensland?

A buyer failing to settle after waiving conditions is rarer than a finance termination but significantly more disruptive. Here is what the seller's rights are, how the process works, and what to do in the first hours.

Most property contract terminations in Queensland happen during the conditional period, when a buyer exercises a finance condition or a building and pest condition. These terminations are stressful but clean: the contract ends, the deposit is returned, and the seller relists. What is far less common, and considerably more damaging, is a buyer who satisfies all conditions and then fails to appear at settlement. At that point the contract is unconditional, the seller has mentally and financially committed to the transaction, and the legal process for resolving the default is more involved. Understanding what rights you have and what to do immediately will make a material difference to the outcome.

What going unconditional means and why it matters

A contract goes unconditional when both the finance condition and the building and pest condition have been satisfied or waived. At that moment, neither party has a contractual right to walk away without breaching the contract. The seller cannot accept another offer. The buyer cannot change their mind.

The significance of going unconditional is that it removes the risk of termination on standard grounds. Sellers typically breathe easier once a contract is unconditional. They begin making plans around settlement: booking removalists, arranging their next purchase, notifying utilities. The buyer's failure to settle after that point is therefore not just a legal problem but a practical one that disrupts a chain of decisions that has already been made.

It is also worth understanding what does not excuse a buyer from settling after going unconditional. A change in the buyer's personal financial circumstances, a drop in the property's market value after exchange, difficulty refinancing, a change in the buyer's employment, or even the bank reducing the approved loan amount after the finance condition was satisfied, none of these entitle a buyer to terminate an unconditional contract. The buyer accepted the risk of those events when they satisfied or waived the conditions.

The notice to complete: the seller's first step

When a buyer fails to settle on the scheduled settlement date, the seller cannot immediately terminate the contract. The REIQ standard contract and Queensland property law require the non-defaulting party to serve a notice to complete before exercising a right to terminate. A notice to complete is a formal document served by the seller's solicitor that gives the buyer an additional period (typically 14 days) to complete settlement and notifies the buyer that failure to do so will entitle the seller to terminate and forfeit the deposit.

The notice to complete must be served in accordance with the contract's notice provisions. The timing, form, and service method all matter. A notice that is served incorrectly or in the wrong form can be challenged by the buyer's solicitor and may delay the seller's ability to terminate. This is one reason why engaging your solicitor immediately, not after waiting a few days to see if the buyer sorts out their situation, is important.

During the notice to complete period, the seller is not required to agree to anything further. If the buyer asks for more time or proposes alternatives, the seller can choose to engage or not, but any agreement must be documented in writing and should be reviewed by the solicitor before it is agreed to. An informal verbal extension can create ambiguity about whether a new notice to complete would need to be served if the buyer defaulted again.

Terminating the contract and forfeiting the deposit

If the buyer does not settle within the notice to complete period, the seller has the right to terminate the contract. Upon termination for buyer default, the seller is entitled to forfeit the deposit. Under the standard REIQ contract, the deposit held by the agent in their trust account is released to the seller once the contract is validly terminated.

In practice, both parties need to sign a release of deposit form, or the seller applies to the court for the deposit to be paid out. Buyers who have defaulted and know the deposit will be lost sometimes refuse to sign the release in order to delay the process. Your solicitor can advise on the fastest path to releasing the deposit in your specific circumstances, which may involve a brief court application if the buyer is uncooperative.

Forfeiting the deposit is not always the end of the matter. If the deposit does not fully compensate the seller for their loss, the seller has the right to pursue the buyer for the difference in damages. This arises most commonly when the seller is forced to relist the property and achieves a lower sale price on the second sale than the defaulting buyer had agreed to pay. The measure of damages in that scenario is the difference between the original contract price and the eventual resale price, plus the costs of the second campaign, less the deposit already forfeited.

The seller's duty to mitigate

Queensland law imposes a duty on the seller to mitigate their loss after a buyer defaults. This means the seller cannot simply leave the property vacant and wait for a damages claim to grow. Once the contract is terminated, the property must be relisted and marketed promptly. A seller who delays relisting in order to maximise the gap between the original contract price and the eventual resale price will find that the courts reduce their damages award to account for the loss that should have been avoided by acting reasonably.

In practical terms, mitigation means engaging your agent as soon as the contract is terminated (or even during the notice to complete period, so the marketing is ready to go the moment the contract ends), and pricing the property at a level that will achieve a genuine sale in the current market. Overpricing the relisted property and pointing to a longer-than-necessary days-on-market period as evidence of loss will not generate sympathy from a court or a buyer's insurer.

Why post-unconditional defaults are rarer but more serious than finance terminations

Finance condition terminations are common and straightforward. The buyer cannot get their loan approved, the condition period expires, and they terminate. The seller loses some time but receives the deposit back (if the deposit was held, and the finance condition was exercised correctly), resets, and relists. The seller bears no financial loss beyond the disruption and delay.

A post-unconditional default is structurally different. The buyer has had their finance approved, meaning a lender has assessed and approved the purchase. Something has happened between finance approval and settlement that has prevented the buyer from completing. That something might be a personal financial collapse, a breakdown in the buyer's circumstances, or in some cases fraud, where a buyer has misrepresented their financial position. The seller's loss can extend beyond the deposit, particularly in a market where prices have softened between contract and the eventual resale.

The difficulty in pursuing damages beyond the deposit should not be understated. Litigation is expensive and the buyer who cannot settle on a property is often in financial difficulty, which means recovering a damages judgment may require proceedings against someone with limited assets. Your solicitor will advise on whether a damages claim is commercially sensible given the buyer's apparent circumstances. In many cases, forfeiting the deposit and moving on efficiently is the best practical outcome, even if the full legal entitlement is larger.

What to do the moment a buyer signals they cannot settle

If your buyer or their solicitor contacts you or your agent on or before settlement day to indicate they cannot settle, the immediate priority is to get your solicitor involved. Do not agree to an informal extension. Do not tell the buyer you will give them more time. Do not accept a partial payment as a gesture of goodwill without legal advice. Every one of those actions, however reasonable they seem in the moment, can affect your legal position and your solicitor's ability to issue a clean notice to complete.

Your agent should also be notified, not because they have a role in the legal process, but because they need to be ready to remarket the property if the contract terminates. The first fortnight after a contract falls over is the most important period for relisting, because the property still has some freshness to the market and the agent's buyer database may still have active prospects from the original campaign.