Why Some Brisbane Property Sales Fail at Settlement

The Eight Common Causes

1. Finance Failure

The buyer's bank or non-bank lender declines or imposes adverse conditions. Most common at $5m-$50m mid-tier deals.

Vendor protection: require credit-approved term sheet before signing; tight finance condition; substantial deposit.

2. FIRB Rejection

Foreign Investment Review Board declines or applies onerous conditions. Affects ~5-10% of foreign-buyer transactions in Brisbane.

Vendor protection: structure as commercial where possible; allow appropriate FIRB time; back-up offers from domestic buyers.

3. Contamination Discovery

DD reveals contamination from prior land use (petrol station, dry cleaner, market garden). Remediation costs trigger price renegotiation or termination.

Vendor protection: Phase 1 environmental review before listing; pre-disclose known issues.

4. Board / Investment Committee Decline

Institutional buyer's internal committee rejects despite acquisitions team support. Affects ~5-10% of listed-REIT and large-institution transactions.

Vendor protection: require board-approved letter at signing; alternate buyers maintained.

5. Market Shift

Material market move between contract and settlement reduces buyer appetite. Most common in long-settlement (12-24+ months) deals.

Vendor protection: hard sunset; CPI escalation; large deposit released to vendor.

6. Planning Approval Failure

DA refused or imposed onerous conditions. Affects subject-to-DA contracts.

Vendor protection: minimum DA quality clause; vendor termination rights on DA failure with cost recovery.

7. Buyer Personal Circumstances

Death, divorce, business failure, or change of personal circumstances. Rare but does happen.

Vendor protection: personal guarantees from buyer principals; corporate buyer with deeper balance sheet preferred.

8. Litigation / Title Issues

Easement disputes, lapsed approvals, neighbour objections, or title defects.

Vendor protection: comprehensive title search before listing; disclosure of any known issues.

Vendor Strategy

Strong vendor-side risk management:

1. Pre-listing DD pack — prevent surprises mid-deal
2. Substantial deposit — 10%+, released after holding period
3. Hard sunset dates — no automatic extensions
4. Default forfeit clauses — financial consequences for buyer termination
5. Back-up offers — keep 1-2 alternatives warm
6. Specialist legal — proper drafting prevents disputes
7. Cost recovery clauses — vendor compensated if buyer terminates

What Happens When a Deal Fails

The recovery path:

• Vendor terminates per contract
• Deposit (or partial) forfeited by buyer
• Vendor re-engages back-up offers or re-markets
• Cycle takes 4-12 weeks typical
• Final price typically 0-10% below original contract

Vendors with strong protections and back-up offers recover 70-85% of failed-deal value. Vendors without recover 50-70%.

Should You Worry?

Settlement failure rates by deal type:
- Unconditional contracts: <2% failure
- Subject-to-DD contracts: 5-10%
- Subject-to-finance: 8-15%
- Subject-to-DA: 15-25%
- Multiple conditions: 15-30%

Choose your conditions carefully. More conditions = more risk.

About ACRES

The Australian Commercial & Residential Group (ACRES) is a Brisbane-based specialist property advisory firm focused on development site sales, off-market transactions, and strategic landowner advisory across South East Queensland. Founded by Daniel McCormack, ACRES advises on transactions from $2m to $100m+ and operates a proprietary database of active Brisbane developers and institutional buyers.