Expression of Interest in Real Estate: Is an EOI Legally Binding?

In this blog we explain the difference between Expression of Interest (EOI) vs Signing a Contract for QLD Property.

We discuss the legal implications of both options, as well as a few tips & tricks – so you can be armed with the knowledge you need to navigate the negotations stage of buying a property in Queensland.

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Hi everybody – George Sourris, Empire Legal.

Today’s topic: Should I sign?

Expression of Interests vs signing a contract? 

What is an Expression of Interest (EOI)?

Purchaser’s are invited to submit their highest and best offer by a deadline to be presented to the vendor with the terms of the purchase. So, this includes things like: the purchase price, the deposit amounts, if there’s going to be a building and pest clause or a finance clause, and what sort of timeframes, the settlement period, and any special conditions – for example, subject to sale, pet approvals, if it’s a unit, etc.

It is designed so that the agent can showcase the offers from the prospective buyers with the conditions attached, to the vendor for their consideration.

However, not all agents use this strategy.

Alternatively, Agents may require a buyer to sign a contract first to then be presented to the vendor.

Now, if the vendor countersigns, then the contract is binding as soon as it’s dispersed to the parties or their lawyers.

So – there is massive risk here, right? If you’re signing a contract before you get it legally reviewed by a lawyer; especially if that contract is say, unconditional and you’ve waived cooling off – you could be stuck up a creek without a paddle because you didn’t realise what you are signing.

We can help.

As always, we suggest you obtain pre-contract advice from our team prior to signing a contract.

Okay, so what have we learnt here? 

You can sign an expression of interest. It’s not a legally binding contract obliging you to purchase.

It is just an expression of interest with the pricing and terms that you are prepared to move forward with a formal offer in the future.

So don’t be scared to sign an EOI and take caution if you’re signing a contract of sale.

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What does expression of interest mean in real estate?

An expression of interest, or EOI, is a way of telling a seller what you would pay without immediately signing a contract. It is used where a property is marketed without a price, on a campaign with a closing date, or where the seller wants to gauge the market before committing.

You submit a figure and usually your proposed terms: settlement period, conditions, deposit. The seller then decides whether to negotiate with you, and a contract follows if they do.

Is an expression of interest legally binding?

Usually not, but that depends entirely on how it is documented, and it is not safe to assume.

A genuine EOI that is expressed as an invitation to negotiate, or is stated to be subject to contract, does not bind you. But a document that contains the parties, the property, the price and the essential terms, and is signed, can amount to a binding contract regardless of what it is called at the top of the page. The label does not decide it. The content does.

This is why we ask to see anything before you sign it, including documents an agent describes as “just an expression of interest” or “not the real contract”.

What is the difference between an EOI and signing a contract?

• An EOI generally starts a negotiation. There is no cooling off period because there is no contract to cool off from, and either side can walk away.
• A contract binds you. In Queensland the standard residential contract gives a buyer a 5 business day cooling off period, and your conditions such as finance and building and pest sit inside it.

The practical risk is the middle ground: a seller treating your EOI as acceptance, or a document that is more binding than you realised.

Is signing a letter with a buyer’s agent a legal contract?

Frequently yes. A buyer’s agent engagement is a services agreement, and it commonly includes an exclusivity period, a fee that is payable on a property they introduce, and a term that survives if you buy that property later through someone else.

Read the fee clause and the exclusivity period before you sign. These are ordinary commercial contracts and they are enforceable.

Can a seller accept your expression of interest and bind you?

Not if the EOI is genuinely non binding, because there is nothing to accept. But if the document has contractual substance, a seller signing it can create a contract. If you submit an EOI and the agent comes back saying the seller has “accepted”, get it checked immediately rather than assuming a formal contract still has to follow.

What should you do before submitting an EOI?

• Have the document reviewed, including anything the agent says is informal
• State clearly that it is subject to contract if that is your intention
• Set out the conditions you need, because a seller who accepts your number will resist adding conditions afterwards
• Know your walk away figure before the closing date, since EOI campaigns are designed to compress your thinking time