What to do when you can’t settle your Australian property contract？

In recent years there has been a significant increase in the amount of foreign investment in Australian real property. Many foreign investors highly value the strength and stability of the Australian property market which intakes over $100 billion dollars per annum. This influx shows no sign of slowing however many Chinese investors have run into significant issues due to tighter lending regulations from Australian banks but more recently because the Chinese Government has cracked down on money transfers out of China.

Now without the means to settle their contracts, many Chinese investors face the prospect of losing their deposit.

What to do?
This is a practical question rather than a legal one and depends on a variety of circumstantial factors. We advise that you speak to your lawyer who can give you a tailored answer to your specific situation.

If all you need is to change the names on a contract between family members then this can be relatively simple and just requires a quick amendment and signature. However, if you are unable to obtain a loan or are otherwise unable to settle the contract then it can be more complicated. The most important thing is that you don’t want to lose the money you have paid for the deposit and stamp duty. To do this in most circumstances you will have to find a new buyer. This is your obligation and only in rare circumstances will your agent do it for you.

Once you have a new purchaser you will need your lawyers help to arrange the new agreement. This can be easier and cheaper in some states then others depending on the local laws and regulations.

AHL Legal
AHL Legal is the largest Chinese legal firm in Australia and has experience assisting foreign investors purchase real property throughout all jurisdictions in Australia. Please contact us if you are planning on investing in Australia or have any other Australian related business or legal matter.

Frequently asked questions*
Q: Can I get my deposit back?
A:  In most states your deposit will be refunded on the settlement date (assuming that you have found a new purchaser).

Q: Can I get my stamp duty back?
A: In most circumstances you can apply to have your stamp duty refunded after the new purchaser agreement has been signed.

Q: I have a family member who wants to replace me as the buyer. Do we have to pay stamp duty again?
A: No but they will have to pay a small transfer fee.

Q: Does the new purchaser also need FIRB approval?
A: If they are a foreign resident then yes they do.

Q: I am on a bridging visa and waiting to get my Australian permanent residence. Do I have to pay the foreign resident stamp duty surcharge？ 
A: You will have to pay the surcharge but if you become an Australia citizen/pr within 5 years of the contract date then you can apply for a refund on the surcharge (only some states).