The strictness of the law relating to the sale of real estate in NSW can have devastating consequences for a successful purchaser at an auction.

It is possible for a purchaser to be the highest bidder after the reserve has been reached or the auctioneer announces that the property is on the market, have it knocked down to him or her and then end up with nothing. It is terrible because the purchaser will have gone to great trouble and spent money on preparing for the auction but, more than this, it is terrible because the joy of being the winning bidder is snatched away so quickly. At one moment, the purchaser is as happy as a butterfly and the next, as sad as a flute.

It happens when, after the auction, the vendor refuses to sign the contract for sale and forbids the auctioneer from signing it on his or her behalf.

It does not happen often but when it happens, it is because the effect of  a particular section of the  Conveyancing Act 1919 is that no legal proceedings can be brought to enforce the sale of land without a memorandum or note of the contract for such sale signed by the party against whom enforcement action is to be taken.

The signed writing does not have to be the contract for sale on display at the auction. Courts have accepted letters to third parties, receipts, drafts and correspondence (even correspondence denying liability under the contract) to be sufficient.  The writing can comprise several different documents, provided there is sufficient connection between them and they are signed.  Even an email can be said to be signed.

This is all very well but arguing in court about whether there is sufficient writing to enforce a contract for sale of land is time consuming, expensive and uncertain. Better that the problem with auctions be fixed by legislation. It is a State matter, a job for Premier Barry O’Farrell’s Government.

In the meantime, if you are selling or leasing real estate of any kind, the property group at Everingham Solomons will be happy to assist you because Helping You is Our Business.

Click here for more information on Mark Johnson.