A mutual termination agreement, sometimes called a rescission, is a legally binding agreement between a property seller and a buyer to end a sale contract before settlement. It requires both parties to willingly agree to cancel the sale.
Currently in Melbourne, these agreements are becoming more common, particularly as market conditions shift. As of December 2025, we’re seeing instances where buyers, perhaps facing financing challenges or a change in personal circumstances, and sellers, potentially reassessing their plans given the moderate 3-6% growth forecast for 2026, mutually agree to terminate. The process involves both parties signing a formal document, usually drafted by their respective legal representatives. A small fee, typically a few thousand dollars, is often negotiated as compensation to cover the seller’s costs – such as marketing expenses of around $3,000-$8,000 – and the buyer’s legal fees. In the Melbourne Eastern Suburbs, where competition for family homes remains strong, a mutual termination can allow a seller to re-enter the market quickly, potentially capitalising on continued demand near key schools and transport links. It’s important to note that a mutual termination differs from a rescission due to a breach of contract, which can have different legal implications. Fletchers’ experience over 105 years emphasises the importance of legal advice throughout this process.
A mutual termination agreement provides a pathway to end a property sale amicably, avoiding potential disputes and allowing both parties to move forward.