7th January, 2025

Buying a home is one of the most exciting experiences in life, but it can also be complex. In Australia, a property purchase is formalised through a Contract of Sale. This contract is a legally binding document that outlines the terms and conditions of the property transaction. It not only lists the purchase price and settlement date but also specifies the obligations of both the purchaser and the vendor. Essentially, it sets the framework for the entire sale and ensures that both parties understand their responsibilities.

The Contract of Sale also typically includes standard terms such as the property description and the deposit amount. However, it can also include special conditions tailored to the particular transaction. These conditions can significantly impact your rights, so understanding them is vital before signing. Failing to fully grasp the contract could lead to unexpected costs or legal issues later.

What Are Special Conditions?

Special conditions are additional clauses in the contract that outline specific terms the sale depends upon. For example, a sale may only proceed if the purchaser secures finance or if inspections are satisfactory. These clauses provide certainty for both parties and protect their interests. However, purchasers often assume that standard wording is sufficient, which can be risky, particularly for first-home buyers or those unfamiliar with property law.

Common Special Conditions

1. Subject to Finance
   This condition protects a purchaser if their home loan is not approved. For instance, if final mortgage approval is delayed, the purchaser may terminate the contract without penalty. Solicitors can often negotiate extensions to allow more time for finance approval.

2. Building and Pest Inspections
   Contracts often require satisfactory building and pest inspections. These checks identify defects, such as termite damage or structural problems. If issues arise, purchasers can renegotiate the price or withdraw from the sale.

3. Early Release of Deposit
   Sometimes, vendors request early access to your deposit to fund another purchase. While common, this carries financial risk. Legal advice is essential to determine if this clause is safe.

4. Interest for Late Completion
   Contracts usually include default interestif settlement is delayed. This interest is calculated daily at a rate set out in the contract. Purchasers often find this frustrating when bank delays cause the setback. However, purchasers typically cannot charge interest if the seller is late.

5. Exclusion of Representations
   This clause prevents claims based on verbal promises not explicitly included in the contract. For example, if a vendor promised to fix a fence, the clause could block legal action unless written in the contract.

6. Agent Indemnity Clause
   Some contracts require purchasers to deal only with the listed agent. Breaching this clause may make the purchaser responsible for paying commission to another agent.

How We Can Help

Understanding a Contract of Sale and its common conditions is vital for every homebuyer. Consulting an experienced conveyancing firm can protect your interests. At Bangalow Conveyancing, we guide purchasers through Contracts of Sale in Byron Bay and surrounding suburbs, including Lismore, Murwillumbah, Lennox Head, Tweed Heads, Ballina, and Bangalow.