The Contract of Sale is a document that sets out the terms and conditions agreed upon between the buyer and seller.

Once signed, the Contract of Sale is a legally binding agreement between the purchaser and the seller.

The document itself can go by different names in each state, for example in New South Wales, it is known as the Contract of Sale of Land, while it is referred to as the Contract of Sale of Real Estate, in Victoria.

The Contract of Sale includes all the important details about the two parties involved in the transaction, the details of the property, the price and the terms of the sale.

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• The names of the vendor and the purchaser
• The property address
• The amount of the deposit to be paid
• The sale price of the property
• The date of the property settlement
• Certificate of title information
• Whether the property will be available as vacant possession, or if it is subject to a lease
• Any other conditions of the sale, such as being subject to finance or building and pest inspections

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Exchange of Contracts

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Until the Contract of Sale has been signed by both parties, there is no legally binding agreement in place.

The process of exchanging contracts is where both parties, with their solicitors or conveyancers, look over the contract of sale, and the buyer and the seller sign the contract of sale. It is also at this point that the required deposit, if any, is paid by the purchaser.

In some instances, the contract of sale is prepared by the real estate agent, and the terms can be agreed upon quickly.

Cooling-Off Period

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Depending on the state you are purchasing the property in, there can be what is known as a Cooling-off Period.

Typically, a cooling-off period is a number of days after the contract of sale has been signed, during which the buyer still has the option of backing out of the transaction.

New South Wales
- Five business days, plus you will have to pay the seller a termination fee of 0.25% of the purchase price

Queensland
- Five business days and a 0.25% fee
- Standard contracts in Queensland include a finance clause

Victoria
- Three business days and a termination fee of 0.20%

Northern Territory
- Four working days, and no termination fee is required

South Australia
- Two business days and the buyer must forfeit a holding deposit of up to $100

Australian Capital Territory
- Five business days and a termination fee of 0.25% of the purchase price

There is no cooling-off period in Tasmania or Western Australia.

Always have a conveyancer review the contract of sale prior to bidding at an auction or putting in an offer on a property.

Similarly, you should never pay a deposit to a real estate agent until everything has been reviewed by a conveyancer, and you have formal approval. If you have a subject to finance clause, seek an extension with the sales agent if there is anything holding up the process.

Many people assume they will use the cooling off period to get the finance approved, but this is not realistic. An unconditional approval normally requires a valuation, which will take more than five days. Similarly, building and pest inspections might need to be ordered, and contracts reviewed.

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