What Does ‘Time Is of the Essence’ Mean in a Queensland Property Contract?
A vendor’s solicitor sends a notice making time of the essence on the settlement date. The buyer’s finance is delayed by three days. The vendor terminates. The deposit is forfeited. This sequence plays out in Queensland more often than most agents realise — and in almost every case, at least one party was caught off-guard by what the phrase actually means and how it activates.
Understanding the time is of the essence doctrine is not optional knowledge for Queensland real estate agents. It sits at the intersection of contract law, REIQ contract mechanics, and your professional duty to keep both parties informed. Getting it wrong — or failing to explain it to a client — can expose a vendor to liability for wrongful termination or leave a buyer losing their deposit on a missed deadline that could have been managed.
The Core Legal Principle in Queensland
At its most fundamental level, “time is of the essence” is a contractual doctrine that makes a specified deadline a condition of the contract, not merely a term. When time is of the essence in respect of a particular obligation — most commonly settlement — strict compliance with that deadline is required. A party who fails to meet the deadline is in repudiatory breach, entitling the innocent party to terminate the contract and pursue remedies including forfeiture of the deposit.
The reverse is equally important. When time is not of the essence, a party who misses a deadline is in breach, but that breach does not automatically entitle the other party to terminate. The innocent party must instead elect to treat the contract as on foot and sue for damages, or give a reasonable notice making time of the essence before termination becomes available.
Queensland’s property law framework has long provided that stipulations in contracts, as to time or otherwise, which under rules of equity are not deemed to be or to have become of the essence of the contract, shall be construed and have effect at law under rules of equity. This was codified in section 62 of the former Property Law Act 1974 (Qld), and the principle carries through into the replacement Property Law Act 2023 (Qld), which replaced the 1974 Act on 1 August 2025. The equitable rule is this: time is not, by default, of the essence in a contract for the sale of land — unless the contract expressly says so, or one party has validly made it so by notice.
This default position differs from the position at common law, where courts historically treated time stipulations as conditions. Equity softened that approach, and Queensland statute has embedded the equitable position as the starting rule. Agents need to understand, however, that this default can be — and in practice regularly is — overridden.
How Time Becomes of the Essence in a Queensland Property Contract
There are three situations in which time is, or becomes, of the essence in a Queensland sale contract.
Express Agreement in the Contract
The most straightforward situation is where the contract itself states that time is of the essence in respect of a particular obligation. The REIQ standard contracts — the most widely used residential and commercial sale contracts in Queensland — do not make time of the essence in the broadest sense, but they do contain express provisions treating particular deadlines as essential. The settlement date in a standard REIQ contract is a prime example: specific clauses in the contract deal with what happens if settlement does not occur on the nominated date and who may terminate if a party fails to complete.
Agents should read any special conditions carefully. It is not uncommon for vendor solicitors to insert a special condition making time of the essence for the finance date, the building and pest inspection date, or indeed all dates. When those conditions are present, the stakes attached to every deadline in the contract are materially elevated.
Making Time of the Essence by Notice
Even where time was not originally of the essence, either party can serve a notice making it so — provided certain conditions are satisfied. This is the mechanism that catches the most people out, because it transforms a situation that felt manageable into one with hard termination rights.
A valid notice making time of the essence must:
- Be in writing
- Specify a new deadline that is reasonable in all the circumstances
- Make it clear that the serving party will treat non-compliance as a repudiation entitling termination
What constitutes a “reasonable” period depends on the circumstances. Industry practice in Queensland is typically around ten to fourteen business days from the date of the notice, though courts have accepted shorter periods where the context justified urgency. A notice giving only two or three days where the other party needs to arrange finance or obtain a replacement conveyancer is unlikely to survive scrutiny. The test is objective: what would a reasonable person in the position of the defaulting party need?
Once a valid notice has been served and the deadline has passed without performance, the serving party may terminate. That right must be exercised in a timely manner — undue delay after the deadline can constitute a waiver of the right to terminate.
Conduct and Implication
Time can also become of the essence through the conduct of the parties or by necessary implication from the contract’s subject matter. In commercial property transactions, particularly where a purchaser is acquiring a business as a going concern, the time-sensitive nature of the deal may allow a court to conclude that the parties treated time as essential even without express language. This is less common in residential transactions but relevant in commercial and development contexts.
Time Is of the Essence and the REIQ Contract
The REIQ Contract for Houses and Residential Land and the REIQ Contract for Commercial Land and Buildings are the documents Queensland agents work with daily. Both contain carefully drafted time-related provisions that agents must understand.
The nominated settlement date in an REIQ residential contract is not, by its terms alone, expressed to make time of the essence in the strictest doctrinal sense. The contract provides a mechanism: if a party fails to complete on the settlement date, the other party may serve a Default Notice giving the defaulting party an additional period (typically five business days under standard REIQ contract terms) to remedy the default, before termination rights and deposit forfeiture provisions engage.
This Default Notice mechanism in the standard REIQ contract is, in effect, a contractual analogue to the equitable notice making time of the essence. It gives the defaulting party a final opportunity to settle while formally placing them on notice that non-compliance will trigger termination. The distinction between this contractual notice mechanism and the common law “time of the essence” notice is important: the contractual mechanism may not give the defaulting party the same “reasonable time” protection that equity would imply. The specific drafting of the contract governs.
Where special conditions insert broader time-of-the-essence language — as they sometimes do in vendor-drafted contracts — the Default Notice mechanism may be bypassed entirely. A party who has missed the settlement date under such a contract may find that termination rights are immediately available, without any notice period. This is a significant difference from the standard REIQ position and one that buyers’ agents in particular need to flag for their clients before contracts are signed.
Consequences of a Time of the Essence Breach
When time has been made essential — whether by express agreement, special condition, or valid notice — and a party fails to comply, the consequences are severe.
For a buyer who fails to settle: The vendor may terminate the contract and, under the standard REIQ contract and section 66 of the former Property Law Act 1974 (Qld) (now carried through in the Property Law Act 2023), may forfeit the deposit. This is typically ten per cent of the purchase price — a substantial sum on any Queensland residential or commercial transaction. The vendor may also sue for damages for any shortfall between the contracted price and a lower price achieved on a subsequent sale, plus costs.
For a vendor who fails to settle: The buyer may terminate and recover the deposit. The buyer may also pursue damages, which in a rising market may be substantial — the cost of alternative accommodation, bridging finance, increased purchase price of a replacement property, and associated transaction costs are all potentially recoverable. The Property Law Act 2023 preserves the damages framework from the former legislation.
Loss of the right to terminate: A party who has a right to terminate on time grounds can lose that right by waiver. Accepting a late payment, continuing to negotiate, or taking actions inconsistent with treating the contract as at an end may all constitute waiver. Once waived, a fresh notice is required before termination rights can be exercised again.
It is important to note that the innocent party does not have to terminate simply because they have the right to do so. The right to terminate is an election. A vendor may choose to accept late settlement with interest rather than terminate, particularly in a softer market where re-selling carries its own risks and costs.
Common Scenarios Agents Encounter
Finance Delays Close to Settlement
A buyer’s lender requires additional time to finalise loan documents. Settlement cannot occur on the contractual date. This is one of the most common situations in Queensland practice. Under a standard REIQ contract without special conditions making time of the essence for settlement, the vendor’s immediate right is to serve a Default Notice after the missed settlement date. The buyer then has the notice period to complete. If both parties communicate and cooperate, a simple extension by way of a written variation to the contract is usually the practical solution — it avoids the formality of the notice process and preserves goodwill.
Where a special condition makes time of the essence from the outset for the settlement date, the vendor’s rights may be more immediate. Agents should always identify this before the client relies on an assumption that a few days’ delay is manageable.
The Vendor Serves a Notice Making Time of the Essence
A vendor becomes concerned that a buyer is stalling or unable to complete. The vendor’s solicitor serves a notice making time of the essence, nominating a new settlement date. The buyer must now take that notice seriously — the reasonable time given in the notice is not a suggestion, it is a deadline attached to real termination rights. An agent advising a buyer in this situation needs to make clear, without equivocation, that the deadline in the notice must be met or the contract is at risk.
Agents cannot assess the legal validity of such a notice. If there is any doubt about the adequacy of the time period or the form of the notice, the client must be directed to their solicitor or conveyancer immediately.
Both Parties Want a Settlement Extension
Mutual agreement to extend settlement is uncomplicated in principle. Both parties sign a written variation extending the settlement date. What sometimes goes wrong is where agents manage this informally — a verbal agreement, an email exchange without formal variation, or an assumption that a request for an extension amounts to an agreed extension. It does not. Until the variation is signed by both parties, the original contractual deadline remains in force, and any notice rights that have accrued do not evaporate simply because one party said they were amenable to a delay.
Agents should be careful not to inadvertently give clients the impression that an extension has been agreed until written confirmation from both parties’ legal representatives is in hand.
The New Property Law Act 2023 (Qld)
The Property Law Act 1974 was replaced by the Property Law Act 2023 (Qld) on 1 August 2025. The Property Law Act 2023 modernises the language and structure of Queensland property law while preserving the core equitable principle: time is not, of itself, of the essence in a contract for the sale of land. The substantive rule that time stipulations are governed by equitable principles — unless the contract provides otherwise or a valid notice has been served — carries through into the new Act.
The new legislation was developed based largely on the recommendations of the Commercial and Property Law Research Centre at Queensland University of Technology following its independent review of the then-current legislation, with the intention of modernising property law in Queensland with contemporary language that reflects current commercial practice.
For agents, the practical effect is that the established body of case law interpreting the time-of-the-essence doctrine under the 1974 Act remains highly relevant guidance under the 2023 Act. The underlying legal principle has not changed; only the statutory vehicle that codifies it has been modernised. Agents operating under REIQ contracts drafted before and after 1 August 2025 should note that the REIQ revises its standard contracts periodically to align with legislative changes, and the current version of the applicable contract should always be used.
Time of the Essence and Conditions Precedent
A related but distinct concept concerns conditions precedent — finance conditions, building and pest inspection conditions, and due diligence conditions that must be satisfied or waived before the contract becomes unconditional. The deadlines attached to these conditions are not, strictly speaking, “time of the essence” clauses in the traditional sense. They operate differently: under a standard REIQ finance condition, if the buyer has not satisfied or waived the condition by the nominated date, the contract may terminate automatically (if drafted that way) or either party may terminate by notice.
These condition dates are, however, strict in the sense that courts will generally enforce them as written. A buyer who allows the finance date to pass without obtaining approval, waiving the condition, or requesting an agreed extension may find that they have lost the protection of the condition and are exposed to forfeiture of their deposit if they cannot complete. The deadline on a standard REIQ finance condition is not a soft date.
The key practical distinction for agents: condition deadlines operate according to the specific drafting of the condition and the applicable contract clause, while time-of-the-essence obligations attach to the obligation to complete (settle). Both require careful date management, but the legal consequences and the notice processes that activate them differ.
What This Means for Queensland Agents
The time-of-the-essence doctrine is not abstract contract law. It has direct, practical consequences for every transaction you manage.
Understand the default position clearly: in Queensland, time is not of the essence by default in a contract for the sale of land. This means a missed settlement date does not automatically end the contract — but it does trigger specific contractual notice processes, and those processes are sequential and time-sensitive in themselves.
Always identify whether special conditions in the contract override the default. A vendor solicitor’s special condition making time of the essence transforms the risk profile of every deadline in the contract. Flag this for your client before the contract is signed, not after a deadline is missed.
Treat the Default Notice process under REIQ contracts as the operational mechanism it is. When a settlement date is missed, the contractual clock starts running. Encourage your client to communicate with their solicitor immediately — do not allow a day to pass without legal advice engaged.
Where both parties want to extend a deadline, drive the written variation to completion. Verbal agreements do not vary written contracts. Your role in ensuring the paperwork is done protects both parties and protects you.
Never advise a client on whether a notice making time of the essence is legally valid, whether they have a right to terminate, or whether they should terminate. Those are legal questions. Your role is to identify the issue, communicate its significance clearly, and direct the client to their solicitor or conveyancer immediately. The consequences — a forfeited deposit, a wrongful termination claim, a damages action — are significant enough that speed in obtaining legal advice is itself an element of the service you provide.
The agents who understand this doctrine well are those who manage late settlements without transactions collapsing. They know which deadlines carry real termination risk, when to push for a written extension, and when to send the client to their lawyer before the window closes.