Warning Statements-Beware of Counter Offers

Warning Statements - Beware of Counter Offers

Although all agents know PAMDA requires a buyer to sign the Form 30C Warning Statement before they sign the contract, many agents may not be aware that this requirement also applies to each proposed contract offered to the buyer for consideration. If this is not complied with, the buyer is not bound to the contract.

If the terms of the contract change- a new Warning Statement must be signed!

If there is a counter offer, or a new contract, a new warning statement must be attached to the second contract. The buyer must be redirected to the warning statement and they must sign a new copy before they sign the second contract. The seller cannot rely upon the buyer having signed the warning statement attached to the first contract, even if they are directed to the warning statement they previously signed before signing the second contract.

Case Study

A recent decision of the Queensland District Court demonstrates the importance of providing a further warning notice to the buyer for a counter offer that was made in a second contract. This case involved two offers that were made to the seller and both were contained in a contract prepared by the seller’s agent. The seller rejected the first offer, but accepted the second offer, which differed from the first in purchase price and special conditions. The buyer had signed the warning statement attached to the first contract but did not sign another warning statement before signing the second contract. The buyer subsequently terminated the contract stating that the contract was not binding as the warning statement had no effect as she had not signed a new warning statement before signing the second contract.

The Result

The Court ruled that the buyer was not bound by the contract and was entitled to terminate the contract and recover the deposit paid to the seller. The Court stated that a warning statement is not a ‘floating document’ signed generally by a buyer for any number of proposed contracts for a particular property, but is intended to be a warning applicable to the proposed relevant contract under consideration.

Practical Tips   

• Provide a new warning statement for every contract the buyer signs
• A warning statement is only applicable to the relevant contract under consideration at the time it is signed.

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