Can a seller pull out before completion?

Buying a home in Melbourne feels exciting and a little nerve racking. You find the place, sign the Contract of Sale, and start picturing the housewarming. Then a rumour lands. The seller has had second thoughts or a higher offer. Can a seller pull out before completion, and what can you do if they try?

This guide explains the Victorian rules in plain English, so you know where you stand from signing to settlement.

First Things First: What Counts as "Completion" in Victoria?

In Victoria, completion is usually called settlement. That's the day the balance of the price is paid, title is transferred, and you get the keys. A property is legally "sold" much earlier, once both buyer and seller have signed the Contract of Sale and each side has a signed copy. From that moment the contract is binding, and walking away is only possible within narrow legal pathways.

The Short Answer

Before contracts are signed and exchanged, a seller can change course. After the contract is signed, a seller generally cannot pull out just because they changed their mind or received a better offer. Victoria does not give sellers a cooling off right. The only time a seller can bring the contract to an end before settlement is where a specific legal ground exists, such as:

A contract condition that is not satisfied
A buyer default that remains unremedied after proper notice
An off the plan sunset clause used lawfully
Very rare legal events like frustration

Cooling Off: Buyers Have It, Sellers Do Not

Victoria's three business day cooling off period protects residential buyers on most private sales. It lets a buyer withdraw shortly after signing, subject to a small deduction, and with several exceptions such as auction purchases.

Sellers do not have a matching right to cool off. If a seller wants the safety of a get out clause, it must be written into the contract as a special condition before signing.

When a Seller Can't Simply Walk Away

Many Melbourne sellers assume they can cancel if nerves kick in or a higher offer lands after signing. That is a myth. Once the contract is on foot, abandoning it without a lawful reason is a breach. The buyer can pursue remedies that include damages and, in land sales, often specific performance, which is a court order forcing the seller to complete the sale.

The Main Ways a Seller Can Legitimately End a Signed Contract

1. A Special Condition Allows It

The standard form contract used in Victoria has general conditions, but parties can add special conditions to deal with unusual needs. For example, a vendor might make the sale conditional on something specific happening by a date, such as approval tied to a subdivision they are undertaking.

If a clearly drafted special condition says the vendor may rescind if the event does not occur, and it is not satisfied in time, the vendor can usually end the contract under that clause. Without a special condition, there is no general right for a seller to pull out just because their plans change.

2. The Buyer Is in Default and Fails to Fix It After Formal Notice

If the purchaser breaches an essential obligation, the seller can serve a proper default notice, give the contractually required time to fix the problem, and then, if it remains unremedied, rescind the contract. Under the Law Institute of Victoria (LIV) contract, default and rescission are dealt with in the general conditions, and a written notice that makes time of the essence is usually required. The Legal Practitioners' Liability Committee explains how default and rescission notices work, including typical 14 day time frames.

Common buyer defaults include:

Failing to pay the deposit on time
Not settling on the due date
Refusing to comply with a valid requirement under the contract

If the buyer repudiates the contract outright, a seller may be able to terminate without first issuing a default notice, although this depends on the facts and is a high stakes step that requires legal advice.

3. Off the Plan Sunset Clauses, But Only With Purchaser Consent or a Court Order

For off the plan sales, Victoria tightened the law to stop abuse of sunset clauses. A vendor cannot rescind under a sunset clause unless:

The purchaser consents after at least 28 days' written notice, or
The Supreme Court permits rescission because it is just and equitable to do so

Attempting to contract out of these rules is ineffective. This regime sits in sections 10A to 10F of the Sale of Land Act 1962, as summarised by the LPLC and reflected in the 2019 legislative amendments.

4. Rare Legal Events: Frustration or Void Contracts

Very rarely, a contract ends because something unexpected makes performance impossible or illegal, known as frustration. Another uncommon path is where the contract is genuinely void or unenforceable, for example due to a fundamental defect. These are exceptional and fact specific, and courts apply them sparingly.

Situations Where Buyers May End the Contract Instead

It helps to know the mirror image. Some events empower the buyer to walk away, which indirectly limits a seller's room to move:

Significant Damage Before Settlement

In Victoria, the risk of damage typically stays with the vendor until settlement. If a house is destroyed or becomes unfit for human occupation before the buyer takes possession, the buyer can end the contract within 14 days of becoming aware, and recover money paid.

Section 32 Issues

The seller must disclose set information in the vendor's statement. Serious non disclosure can give a buyer rescission rights, not the seller.

Understanding these buyer rights matters because a seller who tries to pull out unlawfully can trigger a strong response from a well advised purchaser.

Timeline: What Usually Happens If a Seller Tries to Back Out

Rumour or notice. The agent hints the vendor wants to cancel, or the vendor's conveyancer sends a letter.
Your conveyancer checks the contract. They confirm whether a special condition exists that genuinely allows rescission, or whether the vendor is relying on a buyer default and needs to serve proper notices under the general conditions.
If the vendor is in breach. Your lawyer can issue a default notice that sets a clear deadline. If the deadline passes and the breach continues, you can elect to rescind and get your deposit back, or push for performance of the contract. The LPLC's checklist for purchasers in the face of vendor default maps the decision points, including readiness to settle, tender, and evidence of loss.
If the vendor's rescission is invalid. You may seek specific performance so the seller must complete the sale, or claim damages for losses caused by the attempted walk away. Courts often treat land as unique, so specific performance is a real remedy in property cases.

Practical Protection for Melbourne Buyers

Lodge a Purchaser's Caveat

A caveat is a notice on the title that alerts the world to your equitable interest and stops further dealings without notice. Once you have a signed contract, a purchaser's caveat can prevent the vendor from selling to someone else while you sort out the dispute. Land Use Victoria confirms what a caveat is and who can lodge one.

If you have not lodged a caveat and the vendor tries to deal with the title, you may face delay and extra costs to protect your position. Better to file it early, then give consent when routine steps are needed for settlement.

Keep Your Side Squeaky Clean

Be ready, willing and able to settle. Pay deposits on time, respond to reasonable requests, and have finance sorted. If a dispute reaches court, your clean record helps. The LPLC checklist stresses readiness and tender when enforcing your rights against a defaulting vendor.

Do Pre Settlement Checks and Stay Insured

Arrange the pre settlement inspection, and consider your insurance position. While the vendor usually bears legal risk of damage until settlement in Victoria, the practical consequences of a mishap can still be messy, so discuss cover with your broker. Consumer Affairs Victoria outlines the standard pre settlement steps and checks.

Common Myths, Debunked

Myth 1: The seller can accept a higher offer after signing. Not once the contract is signed by both parties and exchanged. The property is sold at that point, and the seller can't simply accept a later bid.

Myth 2: Sellers get a cooling off period too. Cooling off is a buyer protection. Sellers do not have it in Victorian property sales.

Myth 3: If the buyer is late by a day, the seller can instantly cancel. Usually not. The seller must follow the contract's notice procedure, make time of the essence, and give the buyer the required chance to fix the default. There are limited exceptions where a buyer has clearly repudiated the contract.

Myth 4: Any off the plan delay lets the seller terminate. No. Vendors need the buyer's written consent after proper notice, or a Supreme Court order, to rescind under a sunset clause.

What If the Property Is Damaged Before Settlement?

If a storm knocks out the roof or a fire makes the dwelling unliveable before you take possession, Victorian law lets you end the contract within 14 days of discovering the damage and recover money paid. Minor issues may be handled through compensation rather than termination. Timing, evidence and the contract wording matter, so keep your conveyancer in the loop straight away.

The Seller's Safest Pathway Is Still to Complete

For most vendors, the safest and cheapest path is to honour the contract and settle. If a genuine problem arises, the parties can often negotiate a short extension or a practical solution. If the vendor tries to cancel without a valid ground, the buyer can seek urgent orders, including specific performance, and the dispute becomes expensive for everyone.

How a Melbourne Conveyancer Can Help

A good conveyancer reads the fine print before you sign, flags risky special conditions, and then guides you from exchange to settlement. If the seller wobbles, your conveyancer handles notices, protects your title with a caveat, and lines up the evidence needed for enforcement. It is the calm head you want when emotions are running hot and weekends are spent refreshing listing sites.

Key Takeaways

A seller in Victoria usually cannot pull out after signing unless a valid contract condition applies, the buyer is in breach and fails to fix it after proper notice, an off the plan sunset clause is used lawfully, or a rare legal doctrine applies.
Buyers have cooling off rights on most private sales, sellers do not.
If a vendor tries to cancel without a lawful reason, buyers can seek specific performance or damages, and should protect their interest by lodging a purchaser's caveat.
If a house is destroyed or unfit for occupation before settlement, buyers may rescind within 14 days of becoming aware.

Need Help or a Second Set of Eyes?

If you are buying around Melbourne and want clarity on your contract, talk to a local professional who reads these documents every day. Pearson Chambers Conveyancing can explain your options in plain English, push back on an unlawful attempt by a seller to pull out, and keep your purchase on track.

Get a free Section 32 contract review or ask us anything about your situation:

Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au