In New South Wales, the Contract of Sale is one of the most important documents in any property transaction. It sets out everything from the price and settlement date to the legal obligations both the buyer and seller must meet. 

If you are buying or selling a property, understanding what is in the contract, how it works, what to look out for, and why it matters can make the process feel more manageable. 

What Is a Contract of Sale? 

A Contract of Sale is a written agreement between the buyer and the seller. It sets out all the main details of the deal, including the sale price, what is included with the property, the settlement date, and any extra conditions. Once both sides sign and exchange the contract, it becomes legally binding. 

It acts as a straightforward guide that explains what each side needs to do and when they need to do it, helping the sale move forward smoothly. 

Who Prepares the Contract and When? 

In NSW, the seller’s solicitor or conveyancer is responsible for preparing the contract. The contract must be ready before the property is advertised. That means no listings online or on the street until the paperwork is in place. 

This helps buyers understand the details from the beginning and reduces the risk of problems later on, like confusing contract terms, delays, missing paperwork, or unexpected legal requirements. 

Key Components of a Standard Contract of Sale 

Here is what you will usually find in a typical Contract of Sale: 

Contract of Sale

  • Property Details: This includes the property’s address, legal title, lot and plan number, and any registered easements or restrictions on the land. 
  • Purchase Price and Deposit: The agreed sale price and the upfront deposit amount (usually 10%, unless agreed otherwise). 
  • Settlement Date: The day the buyer takes legal ownership. In NSW, this is often 42 days from the exchange. 
  • Inclusions and Exclusions: A clear list of what is staying with the property (like curtains or appliances) and what is being removed. 
  • Special Conditions: Any extra terms agreed between the buyer and seller, such as penalty interest for delayed settlement, early release of deposit or land tax clauses. 
  • Cooling Off Period Information: Details about the buyer’s right to cancel the contract within a specific period. 
  • Certificates and Legal Documents: These often include a title search, sewer diagram, zoning certificate, and other disclosure items required by law. 

Each part helps make sure the agreement is fair, complete, legally sound, and easy for both sides to follow. 

Cooling Off Period and Section 66W Certificate 

In NSW, residential property buyers are usually entitled to a 5-business-day cooling-off period after signing the contract. This gives them a short window to change their mind and cancel the agreement. If they do, they typically pay a small fee, usually 0.25% of the purchase price. 

However, the cooling-off period can be waived. This is done using a Section 66W Certificate, which is signed by the buyer’s solicitor or conveyancer. It confirms the buyer is giving up their right to cancel the contract. Once this certificate is provided and the contract is exchanged, the agreement becomes final. 

At Strictly Conveyancing, we always recommend getting proper advice before waiving the cooling-off period. Once that right is gone, there is no second chance to walk away. 

Vendor Disclosure Obligations in NSW 

In New South Wales, the law requires sellers to include certain documents in the Contract of Sale. These documents help buyers understand exactly what they are purchasing, and give them important information about the property before they commit. 

Here are some of the key documents sellers must provide: 

  • Title Search: Confirms who owns the property and whether there are any registered interests, such as a mortgage. 
  • Sewerage Diagram: Shows how the property connects to the main sewer system. 
  • Strata Plan: Required if the property is part of a strata scheme (such as a unit or townhouse). It shows the lot boundaries, common property areas, and the overall layout of the scheme. 

In addition to these mandatory disclosure documents, most NSW property contracts also include the standard set of Law Society of NSW clauses. These set out the general rights and obligations of both buyers and sellers, covering matters such as settlement procedures, default, notices, and dispute resolution. 

If any of the required disclosure documents are missing or incorrect, the buyer may be able to withdraw from the contract. That is why it is essential for sellers to have everything in order before listing the property. 

Reviewing the Contract of Sale: Why Legal Advice Matters 

Before signing anything, it is important to have the contract reviewed by someone with legal experience. Even if the document looks straightforward, there can be terms or conditions that affect your rights or cost you money later. 

At Strictly Conveyancing, we review all across NSW. We look for anything that might be unclear, unusual, unfair, or incomplete and explain it in plain English. That way, you know exactly what you are signing before it becomes legally binding. 

If we see something that needs changing, we can negotiate on your behalf and make sure your interests are protected. It is all part of what we do to make the process less stressful and more straightforward for our clients. 

Common Contract Terms to Understand 

Some terms in the contract can be confusing if you have not seen them before. Here are a few explained in plain English: 

  • Exchange of Contracts: This is when both the buyer and seller have signed and swapped contracts. From this point on, the agreement is legally binding. 
  • Time is of the Essence: All deadlines in the contract must be followed exactly. If a party misses one, it could lead to penalties or even cancellation of the sale. 
  • Sunset Clause: Common in off-the-plan purchases, this clause sets a final date for the property to be completed. If it is not ready by then, the buyer may be allowed to cancel. 
  • Default and Termination: This covers what happens if one party does not follow through on the contract. It can include financial penalties or the right to end the agreement. 

Exchange of Contracts: What It Means and When It Happens 

Once both the buyer and the seller have agreed on the terms and signed the contract, the two signed copies are exchanged one for each party. This step is usually handled by the real estate agent when buying in the Sydney area and other the solicitors or conveyancers on both sides when purchasing outside of Sydney.  

From the moment the contracts are exchanged, the sale becomes legally binding. The buyer also pays the deposit at this stage, which is typically 10% of the purchase price unless a different amount is agreed. 

After exchange, both parties begin preparing for settlement. This includes finalising finances, organising removal dates, confirming insurance arrangements, and making sure any conditions in the contract are met. 

Contracts are often exchanged electronically using platforms like DocuSign. It does not matter if the contract is exchanged digitally or in person, the legal effect is the same once exchanged, the deal is locked in. 

Special Conditions: What They Are & Why They Matter 

Special conditions are extra terms added to the contract to suit a specific situation. They are not part of the standard contract, so each one should be reviewed carefully before signing. 

Here are a few common examples of special conditions: 

  • The sale is subject to the buyer selling their current home 
  • The seller agrees to complete certain repairs before settlement 
  • The deposit is to be released early to the seller before settlement. 
  • The settlement date is extended (or shortened) to accommodate a party’s needs. 

These conditions can affect your rights and responsibilities, so it is important to read them closely and ask questions if anything is unclear. 

At Strictly Conveyancing, we go through these clauses line by line with our clients. If something does not seem right, we help you request changes before the contract becomes final. 

Post Exchange: Can the Contract Be Changed? 

Once contracts have been exchanged, changes are not easy, but they can be made if both parties agree. It is important to remember that no change is valid unless it is put in writing and signed by both the buyer and the seller. 

Here are some examples of changes that may happen after the exchange: 

  • A new settlement date is agreed on 
  • The seller agrees to carry out certain repairs before settlement 
  • Items included or excluded from the sale are updated 

Verbal agreements are not enough. If it is not written down and signed, it does not count. Always confirm any changes formally to avoid confusion or disputes later. 

Frequently Asked Questions (FAQs

Can the Contract of Sale be negotiated?
Yes, the terms of a Contract of Sale are negotiable before it is signed and exchanged. Buyers and sellers can discuss changes to the settlement date, deposit amount, inclusions, or special conditions. Once the contract is exchanged, however, changes can only be made if both parties agree in writing.

What happens if the buyer or seller defaults on the contract?
If one party fails to meet their obligations, the other may be entitled to terminate the contract and seek compensation. For example, a seller might keep the deposit if a buyer defaults, while a buyer may be able to claim damages if a seller refuses to settle.

Is the deposit always 10% in NSW?
While 10% is the standard deposit amount, it can be negotiated. Some buyers and sellers agree to a 5% deposit or staged payments, but this must be written into the contract to be valid.

Can a Contract of Sale be cancelled after exchange?
After exchange, the contract is legally binding, but it can be cancelled in certain situations — such as during the cooling-off period, if both parties agree, or if a party defaults. Buyers should seek legal advice before attempting to withdraw to avoid penalties.

What are common mistakes people make with Contracts of Sale?
Common mistakes include not reviewing the contract thoroughly, overlooking special conditions, assuming inclusions are automatically part of the sale, or signing without legal advice. These errors can lead to disputes, extra costs, or settlement delays.

Conclusion 

Understanding the Contract of Sale is a key part of buying or selling property in NSW. While it might seem complex at first, having the right support can make everything feel more manageable and less stressful. 

At Strictly Conveyancing, we take the time to help our clients fully understand what they are signing. Whether you are preparing to sell or ready to buy, we are here to review your contract, answer your questions, guide you through each step, and ensure everything is handled with care. 

We assist clients across Rydalmere, Parramatta, and throughout NSW. If you need help with a Contract of Sale, reach out to Strictly Conveyancing. We make it simple, clear, practical, and reliable.