Once a buyer has signed an offer to purchase—and the seller has accepted—it becomes a legally binding property sale agreement. But what happens when one of the parties changes their mind?
It’s not uncommon for buyers or sellers to reconsider the transaction after the agreement is concluded. A seller may no longer wish to sell, or a buyer may begin to doubt whether they want to proceed. While these scenarios are understandable, walking away from a signed contract isn’t always straightforward.
In many cases, cancellation can trigger legal and financial consequences. Whether or not penalties apply depends entirely on the reason for the cancellation, the timing, and what the contract allows.
Financial Implications When a Sale Agreement Is Cancelled
Even when both parties mutually agree not to go ahead with a property sale agreement, cancellation can still result in financial consequences. Legal fees and estate agent commission are often at the top of the list—and they don’t disappear simply because the deal didn’t go through.
As soon as the sale agreement is signed, a conveyancing attorney is instructed to begin preparing the transfer of the property into the buyer’s name. In cases where the buyer is relying on mortgage finance, the bank will also appoint its own attorney to register a bond over the property, which serves as the bank’s security for the loan.
Once these instructions are issued, both attorneys begin working on the transaction—and if the agreement is later cancelled, they may still be entitled to charge for the work done up to that point. These fees are known as wasted costs, and are typically charged according to a tariff issued by the Legal Practice Council, based on how far the matter had progressed before it was called off.
Estate agents are another key consideration. If an agent was the effective cause of the sale—even if the transaction ultimately did not go through—they may still have a valid claim to commission. The terms of the contract will usually determine who is responsible for this payment, but it is not uncommon for agreements to state that commission can be recovered from the party who caused the cancellation.
Additional costs may arise where a seller has already undertaken repairs or improvements in anticipation of transfer—especially if those were agreed to in the contract. If the buyer then pulls out, the seller can often claim reimbursement for those expenses.
Lastly, for buyers, the risk of losing a deposit is very real if they cancel in breach of the agreement. Most sale contracts contain default clauses that set out when and how a deposit may be forfeited. Buyers should take these provisions seriously, as cancellation under the wrong conditions could result in financial loss.
Understanding the Terms Before Cancelling
While there are scenarios where a property sale agreement can be cancelled without triggering financial consequences, that’s not always the case. In many situations, walking away from the agreement—whether by choice or circumstance—can lead to unexpected costs for one or both parties.
This is why it’s essential to review the terms and conditions of the sale agreement thoroughly. These clauses outline the circumstances under which cancellation is permitted, and what the financial or legal outcomes may be if a party defaults.
If you’re unsure about the implications of cancelling—or what your rights are under the agreement—it’s advisable to seek guidance from a conveyancing attorney or property law expert before signing or withdrawing. The cost of informed legal advice upfront is often far less than the price of a poorly understood contract later.
Aucamp Inc – Conveyancing Attorneys for Property Sale Agreement Advice
Not all cancellations are clean—and not every sale agreement can be walked away from without consequence. At Aucamp Inc, we help clients make sense of their rights and responsibilities when a property sale is cancelled, whether voluntarily or in breach.
If you're unsure what cancellation means for you—financially or legally—speak to our team for straightforward guidance before you act.