What Is A Rescission Notice

What Is A Rescission Notice

Rescission Notice

If your property transaction progresses smoothly, there should be no need for you to know about rescission notices! But, if you receive a rescission notice, or intend to submit one, it’s an indication that your property transaction may be terminated so it’s important to seek legal guidance as soon as possible. There are many complexities involved in property transactions, which is one of the reasons why it’s so important to have an experienced property conveyancer to guide you through the legal aspects of acquiring a property.

Buying a house is a complex task. There are many steps you need to take to ensure that the sale is fair for both parties and that both parties know what they’re agreeing to. Unfortunately, as much as we’d like not to think about it, there are some sly people who may try to sell you a house under fraudulent terms. And, on the flip side, some buyers will not obliged in meeting the reasonable deadlines of their contract. This is why being well educated about your right to back out of a sale and issue a recession notice can be important.

What is a Rescission Notice?

In simple terms, a rescission notice, also be known as a ‘Deed of Rescission’, is a document that expresses the intention to terminate a contract. Put plainly, a rescission notice would mean that both parties in the original contract have no further obligations to each other. It basically rewinds time to the status quo that existed before the contract was written.

Rescission notices are primarily used in sales of residential homes or businesses. Technically, however, any contract that means the terms expanded on below can be rescinded. A rescission notice can be a very stressful and scary thing to receive, so it’s essential to have someone on your side that knows property law well and can help guide you through the rescission process. Finding a trusted property conveyancer, who knows property law inside and out and is willing to fight for you, is a crucial element of the house buying service.

Rescission Notice-What Is A Rescission Notice In Australia 2022-Sample Contract Default

Can you use a rescission notice on any contract?

No. It’s important to understand that rescission notices can only be served if the contract is a voidable one. A voidable contract acts as a standard contract, most of the time. It outlines the clauses and rules that must be adhered to by those on it. However, a voidable contract means that it can be dissolved by one or both parties if:

  • There was a failure to disclose any information in the original contract;
  • There is a breach of contract;
  • The contract terms are found to be unreasonable;
  • There is misrepresentation or fraud found in the original contract; or
  • There is undue influence.

Particularly in the case of property transactions, it’s important for your contract to be voidable. It may be worth asking your property conveyancer to confirm that your contract of sale is voidable before you sign it.

Who decides to use a rescission notice?

Rescissions can be a joint decision by both parties on a contract, or one side can undertake them for legitimate reasons. The first thing to do when deciding to issue a notice of rescission is to get a legal professional to look at the contract. This can be done via a lawyer or a property conveyancer with legal qualifications. They’ll need to review the contract and confirm that there are grounds for it to be rescinded. These are often due to the reasons listed above, such as misinformation or duress. Once the evidence has been gathered, your legal representative will need to prepare the written notice and issue it to the other party. Verbal contracts are not valid rescission notices and are unlikely to hold up in court. You need to contact property conveyancing Brisbane and get expert advice.

When is a rescission notice used?

In property, rescission notices are primarily used within the ‘cooling-off’ period. The time period available to do so varies by state. The cooling-off period is five days in New South Wales, Queensland and Australian Capital Territory, four days in the Northern Territory, three days in Victoria, and two days in South Australia. It begins as soon as the contracts have been signed and exchanged. Cooling-off periods do not always apply to houses purchased at an auction – in this case, your contract may be valid and locked from the day of and have no cooling-off time. Even when dealing with a rescission notice, you may be eligible for fees, typically about 0.025% of the deposit price for each day into the cooling-off period.

Are a default and rescission notice the same thing?

Yes and no. A default notice is a written notice that outlines a default in the contract/agreement and gives the other party a set amount of time – usually 14 days – to remedy it. It is also referred to as a rescission notice when this default form has an added paragraph stating that they will be pulling out of the contract if the default is not remedied.

Is a rescission notice and contract termination the same thing?

The contract is ‘terminated’ but still exists as a previously signed document with a contract termination. Certain obligations on the contract may still remain, and one party can sue the other for not meeting the original terms. With a rescission, it is as if the original contract never existed. All obligations and terms no longer exist.

What Is A Rescission Notice In Victoria NSW Australia 2022

When can a rescission notice not be used?

As touched on above, a non-voidable contract cannot be served with a rescission notice. You can also not put forward a notice of rescission if the deal has progressed to the point that voiding the contract would not result in both parties returning to their pre-contract positions. This is also true if your rescission notice would affect a third party or if the person requesting the rescission is the party that violated the contract in the first place.

If you’re not eligible for a rescission notice, you’ll need to get in touch with a legal professional to discuss alternative options.

I’m being served a rescission notice for not paying within set terms, but it’s my banks’ fault. What can I do?

Unfortunately, banks are overrun with requests due to the current housing boom, and there are lengthy delays on many simple tasks. Also, unfortunately, if it’s your bank’s fault, then it’s still your responsibility in the eyes of the contract. Your bank screwing up can cost you your entire deposit and your dream home. Your seller may be open to extending settlement dates, but they have no obligation to. Trying to get as much sorted with your bank before going into a sale is one way to try and minimise the chances of anything going wrong, but that isn’t a fool proof method.

If your bank’s mistake or negligence causes a notice of rescission to be filed and for you to lose out financially, you may be able to try to claim the loss from the bank. Your property conveyancer or lawyer can help you to do this. Battling with a bank is never an easy task, but you may be able to recoup some of your losses. You need to contact property conveyancing Melbourne and get expert advice.



Related Posts