01 October 2021
Conveyancing – Purchaser bankruptcy
If a purchaser becomes subject to bankruptcy prior to settlement, are they deemed to be in breach of the contract? What usually happens in this event?
Thank you for the question.
Being declared bankrupt is only a breach of contract if the contract provides that it constitutes a breach. Conveyancing contracts do not usually include such a provision.
The breach will only occur if the purchaser is unable to make the next payment required by the contract, usually settlement.
The trustee in bankruptcy takes control of the bankrupt’s affairs and may either complete the contract or disclaim it. With no funds to complete the purchase, the trustee will disclaim the sale.
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