A signed contract binds, so withdrawal needs a recognised basis. The common routes are the cooling off right under section 31 of the Sale of Land Act 1962, a condition such as finance or a satisfactory report that is not satisfied in time, a right to avoid for defective disclosure under section 32K, a right to rescind an off the plan contract where the plan is not registered by the sunset date under section 9AE, or a right to rescind on service of an acquisition notice under section 32M.
If none applies and the buyer refuses to complete, the vendor can serve a default notice and, if the default is not remedied in the required time, rescind. On rescission after a buyer's default the deposit can be forfeited, but only up to a capped proportion of the price, and the vendor must bring the forfeited amount into account when assessing damages, reflecting the common law. Forfeiture of a full tenth of the price where a smaller deposit was paid was doubted in Simcevski v Dixon (No 2), so the forfeiture is capped. The deposit is forfeited whether or not it has been paid, so an unpaid part can still be recovered from the buyer even though the contract is at an end, as in Bot v Ristevski.
This is the kind of matter CMK Legal's property and conveyancing team handles.
Withdrawing without a ground is the costly path, risking the deposit and a damages claim net of the forfeited deposit. The right to avoid for defective disclosure is narrower than many expect and is addressed under the section 32 questions below.
Law referenced: Sale of Land Act 1962 ss 31, 32K, 9AE, 32M; contract default and rescission conditions; Simcevski v Dixon (No 2) [2017] VSC 531; Bot v Ristevski [1981] VicRp 13; Mallett v Jones [1989] VR 122.