Received a Rescission Notice? How to Check It in Victoria

A letter or email has arrived saying the other side has rescinded your contract of sale. Before you treat the sale as over, check which right the notice relies on and whether it meets that right's conditions.

The short answer: A rescission notice is a written notice that ends a Victorian contract of sale using a right given by the Sale of Land Act 1962 or by the contract itself. It works only if that right applies and the notice meets the right's time limit and other requirements, such as who must receive it.

What is a rescission notice?

A rescission notice is the written document a buyer or seller uses to rescind, which means to end the contract under a right the Act or the contract gives them. The Act describes the buyer's cooling-off right, a short window after signing to end the contract, as terminating the contract and the other statutory rights below as rescinding it. Either way, the notice ends the contract only when the right it relies on exists and its conditions are met.

Can a contract be terminated by rescission?

Yes, but only where a statutory or contractual right to end it exists. The Sale of Land Act 1962 gives several, set out in the table below. A conditional contract, meaning one that depends on something such as finance approval, may also let the buyer end it, depending on the condition.

A notice based on the other side's failure to settle or pay follows the contract's default clauses, the terms dealing with a party who doesn't perform. Our guide to the notice to complete at settlement explains those steps.

Step 1: Work out which right the notice relies on

Match the notice to one of these rights, reading it alongside your contract. A Section 32 statement is the information about the property that the Act requires the seller to give the buyer before signing. Accepting title means the buyer accepts the seller's ownership of the land as satisfactory, and rents and profits are income such as rent. An off-the-plan contract sells a lot before the plan of subdivision creating it is registered, and three clear business days means three whole business days after signing.

Right	Who uses it	Time limit	Condition
Cooling off (s 31)	Buyer only	Within three clear business days after the buyer signs	Not available for a publicly advertised auction or a sale within three clear business days before, on the day of or within three clear business days after one; a repeat contract between the same parties on substantially the same terms; a buyer who is an estate agent or a corporate body such as a company; land used mainly for industrial or commercial purposes; or farming land over 20 hectares
Section 32 problem (s 32K)	Buyer	Before the buyer accepts title and becomes entitled to possession or rents and profits	The contract was entered into on the basis of false or missing Section 32 information, or no Section 32 statement was given before the buyer signed
Acquisition notice (s 32M)	Buyer	Before the buyer accepts title and becomes entitled to possession or rents and profits	A notice of intention to acquire the land has been served under section 6 of the Land Acquisition and Compensation Act 1986
House destroyed or unfit (s 34)	Buyer	Within 14 days after becoming aware of the damage	Before the buyer is entitled to possession or rents and profits, the house is so destroyed or damaged that it's unfit to live in
Off-the-plan amendment (s 9AC)	Buyer	Within 14 days after the seller advises in writing of the amendment	The amendment to the plan of subdivision will materially affect the buyer's lot
Off-the-plan registration delay (s 9AE)	Buyer	After 18 months from the contract date, or the period the contract specifies, and before the plan is registered	The plan of subdivision hasn't been registered within that period
Contract condition	Buyer, depending on the condition	Set by the condition	Depends on the condition's wording, such as a finance condition

Step 2: Check the notice against that right's rules

Check the notice against the requirements of the right it uses:

Timing. The cooling-off period runs from the date the buyer signs, not the date the seller signs, and a late notice doesn't end the contract. Our cooling off period guide explains how the days are counted. For other rights, compare the notice's date with the table.
Signature and writing. A cooling-off notice must be signed by the buyer, and a section 34 notice must be in writing.
Recipient. A cooling-off notice must be given to the seller, the seller's agent or the estate agent engaged to sell the land, or left at the seller's address for service (the address the contract names for notices) or at either agent's address. A section 34 notice goes to the seller or the seller's legal practitioner (lawyer) or conveyancer.
Delivery. Our guide to service of notices under your contract explains how notices, including emails, are formally delivered.

If the notice relies on section 32K, no contract clause can remove the right, because any provision that excludes, modifies or restricts the Section 32 rules is void, meaning it has no effect. A buyer can't rescind, though, if a court is satisfied that the seller acted honestly and reasonably and ought fairly to be excused, and that the buyer is substantially as well off as if the rules had been followed. Our article on defective Section 32 rescission rights explains the grounds.

Can an off-the-plan seller rescind under a sunset clause?

Yes, but only in limited circumstances. Under a residential off-the-plan contract, the seller may rescind under a sunset clause, a clause fixing a deadline called the sunset date, only if the plan of subdivision hasn't been registered, or an occupancy permit (the permit allowing the building to be occupied) hasn't been issued, by that date.

Before rescinding, the seller must give each buyer at least 28 days' written notice of the reason for rescinding, the reason for the delay and that the buyer isn't obliged to consent, then obtain the buyer's written consent. You're free to refuse, although the seller may apply to the Supreme Court for an order permitting rescission, which the Court may make if it's satisfied that's just and equitable (fair) in all the circumstances. Our guide to sunset clause deposit returnscovers what happens to the deposit.

What happens to the money paid?

That depends on the right used:

Cooling off: the buyer gets back all money paid except $100 or 0.2% of the purchase price, whichever is greater, which the seller may keep.
House destroyed or unfit (s 34): money the buyer paid is refunded, and any documents of title or transfer (the ownership and transfer papers) go back to the seller.
Other rights: the position depends on the right and the contract terms, so have the notice checked before signing anything about the deposit.

Example: a cooling-off notice sent too late

Suppose you're selling your home by private sale with no auction advertised, and the buyer, who isn't an estate agent or a company, signs the contract on a Thursday. Two weeks later, with no public holidays in between, the buyer emails your agent saying they're ending the contract under the cooling-off period.

The three clear business days after the Thursday signing ended well before that email, so the cooling-off right had gone. Unless the buyer can rely on another right in the table, the contract stands and both sides keep working towards settlement.

Frequently asked questions

Can a seller use the cooling-off period? No. Section 31 gives the cooling-off right to the buyer only. A seller's notice has to rely on a different right, such as a sunset clause in a residential off-the-plan contract, and meet that right's conditions.

Does the contract end the moment the notice is sent? For cooling off, the contract is terminated once the buyer has signed the notice and given it in the way section 31 requires. For the other rights, the notice ends the contract only if the right applies and its conditions are met.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing acts for buyers and sellers in Victorian residential purchases, sales and title transfers. Checking contract rights, deadlines and notices is part of managing a matter through to settlement.

Sources we consulted

Received a rescission notice? Talk to Pearson Chambers

If you've received a rescission notice, or think you may have a right to give one, contact Pearson Chambers promptly so we can review the contract, the deadlines and your next steps.

Email contact@pearsonchambers.com.au.

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.