Paying a 10% deposit on a Property Purchase Contract is a standard requirement for a reason.
As Justice Emmett said, paying the deposit is "a sanction so that purchasers treat the making and completing of contracts with due seriousness". In other words, if you don't settle a contract to purchase a house, home unit or land, you will lose your deposit.
But in recent years, consumer rights have upset the certainty that a purchaser will lose their deposit if they don't settle on a property purchase. In NSW, the rights are that property certificates must be attached to the contract and consumer warranties are implied that there are no adverse affectations. In Queensland there is a Disclosure Statement and in Victoria there is a Section 32 Vendor Statement.
In a recent decision, a purchaser tried to terminate the Contract and recover the deposit paid, relying on a breach of a consumer warranty. The warranty was that the property complied with Council requirements to be used as a dual occupancy. It was a house which had been extended by building a 'granny flat' underneath which could be separately rented out (see the floor plan image).
The problem was, the Council had never approved using the 'granny flat' as separate accommodation.
Even though the facts are straightforward, the purchaser failed to prove a breach of warranty and lost their deposit. They failed because of a lack of evidence.
The lesson from this decision is that it is possible for a purchaser to terminate a contract for purchase of property, and receive a refund of the deposit, if the purchaser can prove a breach of warranty. But as always, high quality legal representation is needed to gather the evidence to prove the case.
To read my case note on the decision