Deed of Rescission QLD: What It Is and When You Use One

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Hi everybody – George Sourris, Empire Legal.

Today’s topic: Deed of Rescission QLD – explained!

What the heck is a Deed of Rescission? Why do I need one? I don’t want one. What do they cost? I don’t understand why we need it. These are all common phrases that we hear surrounding deeds of rescission in Queensland. Let’s dive in.

What is a Deed of Rescission?

A deed of rescission is a legal document, a deed, that allows the parties to a property purchase, the ability to mutually rescind the contract and sets out the terms of the agreement.

Rescinding a contract means: a formal agreement that revokes the original contract between the parties.

Why do I need a Deed of Rescission?

The reason a deed of rescission is usually requested is because the buyer needs to change the purchasing entity on the contract. This is a common one that we see all the time. Say you buy in your personal name and before settlement you realise the property you are buying needs to actually be bought in a company name.

You can’t simply change this on the contract, as this constitutes a material change. It would be a different story if there was just a typo or maybe a middle name missing. That’s fine to agree between solicitors in an email. However, when it comes to adding or removing a party on the contract, you need a whole new contract to be entered into, as the parties  differ from the original signed agreement.

The other main reason is to avoid double transfer duty.

The deed formally rescinds the original contract, effectively meaning it never existed. This protects the buyer from the risk of paying double duty, as long as there is no resale agreement between the parties.  Often, the deed will set out certain terms, such as: the deposit paid under the original contract is to be transferred to the new contract, and the cooling-off period is to be waived for the new contract.

Why can’t I terminate a contract instead of entering into a Deed of Rescission? 

If you’re the purchaser and your contract is not yet unconditional, you can elect to terminate, if you have valid grounds. For example, maybe under finance, or building and pest. The main reason you would enter into a deed of rescission instead of terminating a contract is: #1 –  because the contract is unconditional and you have no grounds to validly terminate; or, #2 – for certainty that the parties will enter into a new contract.

If a matter is terminated, there is likely to be a gap between when the termination takes place and a new contract is signed, and there is no guarantee that the parties will sign a new contract. When a deed of rescission is entered into, the terms usually oblige the new contract to be entered into at the same time. One contract replaces the other simultaneously.

What does a Deed of Rescission cost in Queensland? 

Well, this ranges from law firm to law firm. However, a rough range is between $300-$800 depending on the complexity of the situation in the document.

Why does a Deed of Rescission cost money?

Put simply, it’s legal work drafted by a lawyer, and the terms also need to be explained and discussed with the client and negotiated between the solicitors.

Lawyers, as a professional service, charge for their time and expertise. The good news is, at Empire Legal, we operate most of our services in our property sector on a fixed cost basis.

This structure allows clients peace of mind, with transparency on exactly what the bill will be. Our experienced team deal with thousands of property conveyances across Queensland every year. If you’re buying or selling a property, a real estate agent, mortgage broker, banker, or other professional service with clients that need help with conveyancing – we want to work with you!

Guys, listen up. This area of property law is complex and you should seek professional legal advice in relation to deeds of rescission.  Don’t just YOLO. Get the advice. It could cost you your deal. Well, that’s it for this week.

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George Sourris. Empire Legal.

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Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Brisbane, Queensland, Australia.

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What is a deed of rescission?

A deed of rescission is a written agreement between the buyer and the seller to cancel a contract by consent and put both parties back where they were before they signed. It is not a termination for breach and nobody is blamed. Both sides simply agree the contract is at an end.

It is used when a contract needs to be unwound cleanly and replaced, or when both parties have decided the deal is not proceeding and want certainty rather than an argument about who defaulted.

When do you use a deed of rescission in Queensland?

The common situations we see:

• The contract has a mistake in it that cannot be fixed by amendment, such as the wrong buying entity, the wrong lot description or a materially wrong price
• The parties want to restructure, for example changing from an individual buyer to a trust or company, which usually means rescinding and signing fresh
• Both sides agree to walk away and want the deposit dealt with by agreement rather than by a dispute
• A related transaction has failed and both parties accept the deal no longer works

What is the difference between rescission and termination?

Termination is usually one party ending the contract because the other has breached it, or because a condition such as finance or building and pest was not satisfied. It is a right you exercise.

Rescission by deed is both parties agreeing to cancel. There is no breach, no notice, and no argument about whether the right existed. That is exactly why it is used: it removes the risk of a later claim that the termination was invalid.

What happens to the deposit under a deed of rescission?

Whatever the deed says. That is the point of documenting it. In most cases the deposit is returned in full to the buyer, but the parties can agree any split, including the buyer contributing to costs already incurred.

Do not rely on a handshake here. The stakeholder holding the deposit needs a written authority signed by both parties before releasing it, and the deed is that authority.

Do you need a lawyer for a deed of rescission?

Yes, and this is not us selling work for the sake of it. A deed that does not properly release both parties from all claims under the original contract leaves the door open for one side to come back later. A poorly drafted deed can also create a duty issue if the transaction is being restructured rather than genuinely cancelled.

If you are rescinding in order to sign a fresh contract, the duty consequences need checking before you sign anything. Get advice on the sequence, not just the wording.

Is there a deed of rescission template?

There are templates online and we would not use one. The clauses that matter are the mutual release, the treatment of the deposit, who bears costs already incurred, and whether anything survives the rescission. Those change with the circumstances, and a generic form usually gets the release wrong.