Purchasing a property is a significant decision, and signing a contract is a crucial step in the process. But what happens if circumstances change after the contract goes unconditional? Can you still back out of the deal? Let’s explore the implications and potential options.
An unconditional contract signifies a firm commitment, and withdrawing from it can have serious legal and financial consequences.

What Does "Unconditional" Mean?
A property contract becomes unconditional when all the conditions specified in the agreement are met or waived. Common conditions include finance approval, satisfactory building and pest inspections, or subject-to-sale clauses. Once these are satisfied, the contract is binding on both the buyer and the seller.
An unconditional contract signifies a firm commitment, and withdrawing from it can have serious legal and financial consequences.
Can You Cancel an Unconditional Contract?
Generally, getting out of an unconditional property contract is challenging and can lead to significant penalties. However, there are a few scenarios where termination might be possible:
1. Mutual Agreement
Both the buyer and seller can agree to terminate the contract. This is rare and usually requires the buyer to compensate the seller for any losses incurred, such as missed opportunities or additional costs.
2. Breach of Contract
If the seller fails to fulfill their obligations under the contract, such as not providing vacant possession or misrepresenting the property, the buyer may have grounds to terminate. It’s essential to seek legal advice to determine whether a breach has occurred.
3. Cooling-Off Period
In some states and territories, buyers are entitled to a cooling-off period even after signing the contract. However, once the contract goes unconditional, this period is typically no longer applicable. Cooling-off periods vary across Australia, so it’s important to know the rules in your state.
4. Legal Loopholes or Misrepresentation
If the property was misrepresented or there was misleading conduct during the sale process, you may have legal grounds to exit the contract. This typically requires proof and often involves legal action.
Consequences of Backing Out
Backing out of an unconditional contract is not without repercussions. Here are some of the potential consequences:
Forfeiture of Deposit:
The seller may retain the buyer’s deposit, which is usually a substantial amount.
Legal Action:
The seller may sue for damages, including the difference between the agreed price and the eventual sale price if the property is resold for less.
Stress and Financial Impact:
Navigating legal disputes can be stressful and expensive. It’s essential to fully understand the implications before deciding to withdraw.
Preventative Measures
To avoid finding yourself in a difficult position, consider these steps:
Conduct Thorough Due Diligence: Ensure you’re completely satisfied with the property, finances, and contract terms before signing.
Seek Professional Advice: Work with a lawyer or conveyancer to understand your obligations and rights.
Include Exit Clauses: If you anticipate potential issues, include conditions in the contract that provide an exit route, such as subject-to-finance or subject-to-inspection clauses.
What to Do If You Need to Withdraw
If you find yourself needing to exit an unconditional contract, here’s what to do:
1. Consult a Legal Professional:
Speak with a property lawyer or conveyancer to understand your options and potential liabilities.
2. Communicate with the Seller:
In some cases, open communication may lead to a mutually agreeable solution.
3. Prepare for Consequences:
Be aware of potential financial penalties and legal outcomes.
Getting out of a property contract once it becomes unconditional is difficult, but not entirely impossible. The key is understanding your rights and obligations before signing the contract and seeking professional advice if circumstances change.
Remember, prevention is always better than cure. Taking the time to conduct thorough due diligence and include protective clauses in your contract can save you from significant stress and financial strain in the future.
Ready to find your next investment property? At Walsh Brown Property, we specialize in helping investors secure properties that deliver exceptional returns. From market analysis to negotiation and due diligence, we’re here to guide you every step of the way. Reach out today to see how we can assist you in finding your next property! Visit our website or contact us at aly@walshbrownproperty.com.au or 0411771181.
*** Disclaimer: The information provided in this blog is intended for general informational purposes only. While we have made every effort to ensure the accuracy and reliability of the content, it should not be considered as personalised or professional advice. The homebuying process can vary based on individual circumstances, property types, and location-specific regulations.
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