Vendor finance is an alternative way to buy or sell property or businesses in Queensland when traditional bank lending is unavailable. Instead of receiving the full purchase price at settlement, the seller allows the buyer to pay over time under agreed terms. While this can create opportunities, vendor finance in Queensland carries unique legal risks that make proper advice essential.
What Is Vendor Finance in Queensland?
Vendor finance is a private arrangement where the seller provides credit to the buyer. It is commonly used in residential property, commercial property, and business sales. In Queensland, vendor finance is treated differently from other states due to strict property and credit laws.
Why Queensland Law Treats Vendor Finance Differently
Under the Property Law Act 1974 (Qld), if a buyer pays more than a 10% deposit before receiving title, the agreement may automatically become an instalment contract. This shifts legal power toward the buyer and restricts the seller’s rights, including limits on mortgaging the property and stricter termination rules.
Recent reforms under the Property Law Act 2023 also introduced stronger disclosure obligations, particularly for lease-option and rent-to-buy arrangements. Failing to comply can allow buyers to terminate agreements or seek compensation.
Vendor Finance for Business Sales
When vendor finance is used in business transactions, sellers must protect themselves by registering security interests on the Personal Property Securities Register (PPSR). Without proper registration, sellers risk becoming unsecured creditors if the buyer defaults.
Credit Law Risks for Sellers
Vendor finance involving residential property may trigger the National Credit Code if the seller is considered to be providing credit as a business. Non-compliance can result in penalties, loss of interest, or unenforceable agreements.
Why Legal Advice Is Critical
Vendor finance is not a “DIY” solution in Queensland. Small drafting errors can result in loss of control, delayed enforcement, or unintended tax and credit consequences. Legal advice ensures agreements are structured correctly, risks are managed, and both parties understand their obligations.
Mark Game and the legal team at Aylward Game Solicitors provide strategic, risk-aware advice on vendor finance arrangements across Queensland, helping clients avoid costly mistakes.
Frequently Asked Questions (FAQs)
1. What is vendor finance?
Vendor finance is when the seller lends money to the buyer, allowing payment over time instead of full settlement up front.
2. Is vendor finance legal in Queensland?
Yes, but it is tightly regulated under property, credit, and disclosure laws.
3. What is an instalment contract?
An instalment contract arises when buyers pay more than 10% before receiving title, triggering strict legal protections.
4. Can vendor finance affect stamp duty?
Yes. Duty may apply even before title transfers, depending on the structure.
5. Is vendor finance risky for sellers?
Yes, without proper legal drafting and security protections.
6. Does vendor finance apply to business sales?
Yes. PPSR registration is critical for seller protection.
7. Can buyers lose money under vendor finance?
Yes, especially if agreements are poorly structured.
8. Do both parties need legal advice?
Yes. Vendor finance creates competing interests.
Contact Aylward Game Solicitors:
Phone: 1800 217 217
Email: mail@aylwardgame.com.au
Website: https://www.aylwardgame.com.au
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