The guide Actively looking4 min read

Reading the contract

What the contract is called in your state, which parts are negotiable, what 'subject to finance' actually protects, and how long you have to change your mind.

By Paddy Carroll · Founder, HomePlanner

The contract is the only document in the purchase that binds you. Everything before it — the price guide, the conversation at the open, the agent's enthusiasm — is weather. This chapter is about what is in it, what you can change, and the two clauses that decide how much risk you are carrying.

What it's called where you are

Every state requires the seller to disclose certain things before you sign, and every state gives it a different name. Ask for it early: you are entitled to it before you commit, and reading it is free.

State	The disclosure document	Worth knowing
NSW	Contract for sale, with prescribed documents attached	Must be available before the property can be marketed
VIC	Section 32, the vendor's statement	Errors or omissions can give you a right to withdraw
QLD	Contract, usually the REIQ standard form	Disclosure sits in the contract and its warning statement
SA	Form 1, the vendor's statement	Serving it starts the cooling-off clock
WA	Offer and acceptance, plus the seller disclosure	The offer itself forms the contract once accepted

Names and mechanics vary further for off-the-plan, strata and rural property. Your conveyancer will tell you which applies.

What you can actually negotiate

Buyers tend to treat the contract as fixed and the price as the only lever. The opposite is often more useful: a vendor who will not move on price will frequently move on terms, and terms are where your risk lives.

Settlement length

Typically 30 to 90 days. A vendor who has already bought elsewhere may want it short; one who hasn't may want it long. Matching their timing is worth real money and costs you nothing if it suits you too.

Deposit size

Ten per cent is conventional, not compulsory. Five is often accepted, and a deposit bond may be an option. Ask where it is held — it should be a trust or stakeholder account, not the vendor's pocket.

Inclusions and exclusions

Dishwasher, light fittings, curtains, the shed, the pot plants in the photographs. Write down what you assumed was included. Assumption is not a contract term.

Conditions

Subject to finance, subject to a satisfactory building and pest report, subject to the sale of your own place. Each one lowers your risk and weakens your offer. That trade is the negotiation.

Subject to finance, and why it matters more than people think

Pre-approval is not approval. Between them sits the lender's valuation of this specific property, and a valuation that comes in under your contract price is the most common way a purchase falls over.

A subject-to-finance clause means that if you cannot get the loan within the agreed window, you can withdraw and normally get your deposit back. The clause names three things: the amount, the lender, and the date by which finance must be confirmed. Fourteen days from signing is a common window, and extensions can usually be negotiated if you ask before the date rather than after it.

With the clause

You have a way out if the money doesn't arrive.

If the valuation comes in low: You can withdraw, or go back and renegotiate from a real position.
If finance is declined: You withdraw within the window and normally recover your deposit.
If the vendor resells for less: Not your problem.
What it costs you: A weaker offer against an unconditional one, and sometimes the property.

Without it

The contract is binding whatever your lender decides.

If the valuation comes in low: You make up the shortfall in cash, or you are in breach.
If finance is declined: You lose the deposit, and that may not be the end of it.
If the vendor resells for less: You can be pursued for the difference.
What it costs you: Nothing, until the day it costs you everything.

This is the central trade of a competitive market. Going unconditional wins more auctions and more contest situations, and it moves the entire valuation risk onto you. Do it with your eyes open, or not at all.

Cooling off: how long you have to change your mind

Most states give a private-treaty buyer a short period after signing in which they can withdraw, usually at a cost. It is a genuine safety net and it is much shorter than people expect.

State	Cooling-off period	What withdrawing costs you
NSW	5 business days, 10 for off the plan	0.25% of the purchase price
VIC	3 clear business days	The greater of $100 or 0.2%
QLD	5 business days	0.25% of the purchase price
SA	2 business days	Any deposit over $100 is refunded

The clock generally starts when you receive the signed contract, and ends at 5pm on the last day. WA has no statutory cooling-off period at all; there, the conditions you write into the offer are your only protection.

Before you sign anything

1Send the contract to your conveyancer and wait for their response. Days, not hours — build it into your timing.
2Read the inclusions list against your own written assumptions.
3Check the settlement date against your lease, your finance and your life.
4Confirm every condition you asked for is actually written in, in the words you agreed.
5For strata, read the report: the admin and sinking funds, and three to five years of minutes.
6Know your cooling-off end date, in writing, before you sign.

Do this in HomePlannerDocuments Contract, disclosure statement, strata report and inspection reports in one place, so the version your conveyancer is reading is the version you're reading.Free account required

Before you move on

You've had the contract reviewed before signing, not after
You know your state's cooling-off period and what withdrawing would cost
Every condition you negotiated is written into the contract
You've decided deliberately whether to go subject to finance
The inclusions list matches what you think you're buying