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What Is a Contract of Sale in NSW?
A contract of sale is the legally binding document that transfers ownership of a property from the vendor (seller) to the purchaser (buyer) in New South Wales. Under the Conveyancing Act 1919 (NSW), a vendor must have a completed contract prepared before the property can be advertised for sale.
The contract is prepared by the vendor's solicitor and typically contains:
- A front page (the "contract particulars") summarising key details
- Standard (printed) conditions — these are the same in every NSW property sale
- Special conditions — inserted by the vendor's solicitor for this specific property
- Mandatory disclosure attachments (title search, zoning certificates, sewerage diagram, etc.)
The Structure of a NSW Contract of Sale
| Section | What it contains | Who can change it |
|---|---|---|
| Contract particulars (front page) | Property address, price, deposit amount, settlement date, parties | Either party (by negotiation before exchange) |
| Printed conditions (Part 1) | Standard clauses that apply to all NSW property sales | Cannot be removed — only modified by special conditions |
| Special conditions (Part 2) | Vendor-specific additions — finance clause, early access, GST, etc. | Can be negotiated before exchange |
| Inclusions / exclusions schedule | List of what stays (fixtures) and what goes (chattels) | Can be negotiated before exchange |
| Disclosure documents | Title, zoning, sewerage, drainage, building certificate | Cannot be changed — factual attachments |
The Front Page: What to Check First
The front page ("contract particulars") is the single most important page to read carefully before exchange. Check every field:
Property description and title reference
Confirm the lot and DP number matches the property you inspected. Errors here are rare but can cause significant legal issues. Your solicitor will verify this against the title search.
Purchase price
Must match the agreed price exactly. Any variation in writing overrides a verbal agreement. Check the price is correct before signing.
Deposit amount and terms
Standard is 10% on exchange. In a hot market, some vendors require the full 10% immediately. Others accept a 5% deposit on exchange with the remaining 5% on settlement. This is negotiable before exchange.
Settlement date
Typically 42 days (6 weeks) after exchange in NSW. Can be shorter (e.g., 28 days) or longer (e.g., 90 days) if agreed. Ensure the date is realistic for your finance approval timeline. A missed settlement date carries penalties.
Vendor and purchaser names
Names must exactly match legal documents (passport, driver's licence). Joint purchasers should confirm whether holding as joint tenants or tenants in common (and percentage shares).
GST
Most established residential properties are GST-free. But if you're buying a new property or off-the-plan, GST is included in the price or may be withheld. The contract should specify.
The Cooling-Off Period in NSW
Unlike some other states, NSW residential property sales come with a standard cooling-off period. Here's how it works:
| Detail | NSW rule |
|---|---|
| Length | 5 business days from the date the buyer receives the signed contract |
| Penalty to rescind | 0.25% of the purchase price (on a $900K property = $2,250 lost) |
| Applies to | All private treaty (private sale) transactions |
| Does NOT apply to | Auction sales — buying at auction is unconditional and binding immediately |
| Waiving cooling-off | Buyer can waive via s66W certificate signed by their solicitor — often done when buyer wants to compete for popular properties |
| Extension | Can be extended by agreement in the contract or by written consent of both parties |
Special Conditions: The Most Important Section
Special conditions are where the vendor's solicitor can insert clauses that modify the standard contract terms. They override printed conditions. This is where most of the risk — and negotiation opportunity — sits.
Common special conditions in NSW contracts:
Subject to finance clause
If the vendor agrees to include a finance clause, you can rescind if your formal loan approval is not received by the deadline (usually 14–21 days after exchange). Many vendors in competitive markets refuse to include finance clauses. This means you must have unconditional pre-approval before signing.
Subject to building and pest inspection
Allows you to rescind if the inspection reveals major structural or pest issues. Must be conducted within a set timeframe (usually 7–14 days). Rare in auction sales; more common in private treaty in slower markets.
"As is" condition / no warranties on inclusions
Some contracts include clauses stating the property is sold as-is and the vendor makes no warranties about the condition of fittings, appliances, or inclusions. This limits your recourse if something is broken or missing at settlement.
Early access provisions
If the vendor allows you access before settlement (e.g., to do renovations or store items), the contract may make you responsible for any damage that occurs during this period. Read these clauses very carefully.
Extended settlement period
Off-the-plan purchases or sales where the vendor hasn't yet bought their next home may have long settlement periods (6–24 months). This extends the time your deposit is tied up and increases the risk of market value changes before settlement.
GST margin scheme clause
For new properties, a vendor may elect to use the GST margin scheme, which affects how GST is calculated. This is mainly relevant for investors — residential buyers can usually claim a GST credit if the property is sold in the course of an enterprise.
Sunset clauses (off-the-plan)
Off-the-plan contracts may contain sunset clauses allowing the vendor to rescind if the development is not completed by a certain date. This can be used to cancel contracts after property prices rise and re-sell at a higher price. NSW law (since 2016) restricts vendor sunset clause rescissions, but check any such clause carefully with your solicitor.
Inclusions and Exclusions: Don't Assume Anything Stays
Legally, "fixtures" (things attached to the property and intended to remain) are included in the sale by default. "Chattels" (movable personal property) must be specifically listed as inclusions or they leave with the vendor.
| Item | Usually a fixture (stays)? | Notes |
|---|---|---|
| Built-in wardrobes | Yes | Attached to walls — fixture |
| Dishwasher (built-in) | Yes | Plumbed in — usually a fixture |
| Light fittings (hardwired) | Yes | Wired in — fixture. Decorative pendant lights sometimes excluded. |
| Air conditioning (ducted/split system installed) | Yes | Fixed to property — fixture |
| Freestanding fridge | No | Chattel — leaves with vendor unless listed as inclusion |
| Curtains / blinds | Grey area | Custom-fitted = fixture. Off-the-shelf rods = chattel. Always check the contract. |
| Pool equipment / pumps | Yes | Attached to pool — fixture |
| Garden shed (freestanding) | No | Not fixed to ground — chattel (unless listed as inclusion) |
Disclosure Documents: What's Attached to the Contract
By law, the vendor must attach certain documents to the contract before exchange. Your solicitor checks these, but it helps to understand what they are:
| Document | What it tells you | Red flags |
|---|---|---|
| Title search | Who owns the property, any mortgages or encumbrances | Multiple mortgages, unresolved caveats, or ownership disputes |
| Section 10.7 Planning Certificate (zoning certificate) | Zoning, permitted uses, flood/bushfire overlays | Flood zone (Class 1 or 2), bushfire prone area, heritage listing |
| Sewerage service diagram | Location of sewer lines on/near the property | Sewer main running through the property — limits development |
| Drainage diagram | Surface drainage layout | Complex drainage issues, drainage easements |
| Easements and covenants (on title) | Rights others have over the property (access, services) | Right-of-way for neighbours, restrictive covenants limiting use |
| Building certificate (if obtained) | Council approval for structures on the property | Unapproved additions — pergolas, granny flats, pools built without DA |
Exchange vs Settlement: The Two Critical Milestones
Many first home buyers confuse exchange and settlement. They are two distinct legal events, separated by weeks.
| Exchange | Settlement | |
|---|---|---|
| What happens | Both parties sign identical copies of the contract; copies are swapped. Deposit paid. | Balance of purchase price paid; title transfers to buyer. Keys released. |
| Timing | When offer is accepted and contract reviewed | Usually 42 days after exchange (can be longer or shorter) |
| Binding? | Yes — contract is legally binding from exchange (subject to cooling-off) | Yes — ownership legally transfers at settlement |
| Deposit | 10% paid (or 5% if negotiated) on exchange | Remaining 90% (or 95%) paid on settlement day via your lender |
| Insurance | Risk typically passes to buyer at exchange in NSW — get buildings insurance now | You need insurance in place from exchange date |
Questions to Ask Your Solicitor Before Exchange
Don't exchange until your solicitor has answered these questions:
- Are there any unapproved structures on the property?
- Are there any easements, covenants, or restrictions that could affect my use of the property?
- Is the property in a flood zone, bushfire prone area, or heritage overlay?
- Are there any outstanding rates, levies, water charges, or strata debts?
- What are the special conditions and are any of them unusual?
- Is there a finance clause? If not, am I protected by my pre-approval?
- Are all the appliances, chattels, and fittings I saw during inspection listed as inclusions?
- What is the settlement date, and can my bank meet it?
Frequently Asked Questions
In NSW, the cooling-off period is 5 business days from when the buyer receives a copy of the signed contract. You can rescind during this period but forfeit 0.25% of the purchase price. There is no cooling-off period for auction sales.
A standard NSW contract includes: property description and title documents, purchase price and deposit terms, inclusions and exclusions, special conditions, a Section 10.7 planning certificate, sewerage diagram, drainage diagram, and any easements or covenants affecting the property.
Yes. Before exchange, a NSW contract of sale is negotiable. Your solicitor can request special conditions be added or removed — such as making the sale subject to finance, or adjusting the settlement date. After exchange, the contract is binding.
Exchange is when both parties sign the contract and the deposit is paid — legally binding from this point. Settlement is when the balance of the purchase price is paid and the property transfers to the buyer, usually 42 days after exchange.
Yes. Legally you don't have to use a solicitor, but given the size of the transaction and the legal complexity of contract conditions in NSW, using a conveyancer or solicitor is strongly recommended. The cost ($1,500–$3,000) is trivial compared to the risk of missing a problematic clause.
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