Gazumping is defined as the situation where a seller, despite having a verbal agreement with one buyer, concludes a contract with another while the first
is finalising finance and performing other necessary tests or inspection.
Despite being legal in most cases, calls have been made in some jurisdictions for gazumping to be outlawed. Instances of gazumping vary widely according
to jurisdiction; however, it is generally accepted that gazumping is almost non-existent in Queensland when compared to other states in Australia.
The key difference between Queensland's approach to the formation of a contract and New South Wales's approach is the point at which a binding contract
is formed. When a buyer makes an offer to purchase a property in NSW two separate, identical contracts are signed, but not exchanged. Following
this, the buyer is required to complete all necessary arrangements for the obtaining of finance and completion of necessary searches. It is only
once completing these to the satisfaction of both parties that the contracts are exchanged and a binding agreement formed. The issue this raises
is that, even when the seller has given the buyer verbal assurance of a contract, there is no binding agreement for the buyer to rely on while
seeking finance and completing the searches. What this results in is a window of opportunity for the seller, should they receive a higher offer
or change their mind, to contract with another party. Queensland's process on the other hand, does not allow this opportunity. When the buyer makes
an offer to sell a property they sign a contract which is then passed on to the seller who is able to accept or reject the offer as they see fit.
Should the seller choose to accept the offer, the contract is signed and a binding agreement is formed once it has been delivered to the buyer's
solicitor. Queensland's process therefore, significantly minimises the opportunity the seller has to gazump the buyer.
For further information please contact Roland Taylor in our Mackay office on (07) 4963 0807 or at [email protected]