What is an Instalment Contract?
An Instalment Contract in Queensland property law is a type of sale contract where the buyer agrees to pay the purchase price in multiple instalments over time, before gaining legal title (ownership) of the property. It’s different from the standard contract where payment is made in full at settlement and title is transferred immediately to the buyer.
Legal Definition (Property Law Act 1974, Section 71)
As per the Property Law Act 1974, an instalment contract is legally defined as a contract where:
“The buyer is required to make two or more payments (other than a deposit) before the seller is required to transfer title to the buyer.”
Key Consequences and Legal Effects
1. Extra Protection for the Buyer: The seller cannot terminate the contract for default in payment without giving 30 days written notice to remedy the default. In contrary, in standard contract, if the buyer defaults, the seller can terminate, and a new contract can be entered into with a new buyer.
2. Caveat Can Be Lodged: The buyer may lodge a non-lapsing caveat over the property
even before legal title is transferred, protecting their interest.
3. The Seller is restricted from further mortgaging over the property.
4. Delayed Transfer of Ownership:
The buyer does not receive legal title until the final instalment is paid. The seller retains ownership and control until then. It may limits the rights of buyer to deal or access the property.
5. Higher Risk for Buyer
If the buyer defaults and cannot rectify it, they may lose the property and past instalments. They have no title security while making payments.
6. Regulation & Disclosure
Instalment contracts are heavily regulated due to their risk profile and are often discouraged without legal advice.
Common Pitfalls of Instalment Contracts
| Issue | Explanation |
| No title until full payment | Buyer can be vulnerable if the seller has financial trouble or encumbrances on the property. |
| Hard to finance | Banks typically won’t finance buyers under instalment contracts. |
| Complex legal structure | Not standard – requires custom terms and strong legal advice. |
Practical Tip
If you’re considering entering into or drafting an instalment contract in Queensland, it’s essential to get legal advice, as these contracts are not common and carry legal risk for both parties.