How to Read a Property Contract in Australia: A Complete Guide
Learn how to read and understand an Australian property contract step by step. Covers every section from cover page to annexures, state-specific formats, and common mistakes to avoid.
Definition
What is a property contract?
A property contract (contract of sale) is the legally binding agreement between a buyer and seller that sets out the terms and conditions of a property transaction, including the price, settlement date, property details, and any special conditions. Once exchanged, both parties are legally obligated to complete the sale.
Australian property contracts can run to 30 pages or more, filled with legal terminology that can be confusing for even experienced buyers. Understanding what each section means — and what to look for — is essential to protecting your interests and avoiding costly mistakes.
This guide walks you through every section of a typical Australian property contract, explains what to check, and highlights the areas where problems most commonly arise.
Step-by-Step: How to Read a Property Contract
- 1
Start with the cover page and summary
The front page typically identifies the parties (buyer and seller), the property address, the purchase price, the deposit amount, and the proposed settlement date. Verify every detail is correct, including the spelling of your name, the full legal property description, and the settlement timeframe.
- 2
Check the parties to the contract
Confirm the vendor (seller) is the registered owner of the property by cross-referencing with the title search. If the vendor is a company, trust, or deceased estate, additional checks may be needed. Ensure your name (or the purchasing entity) is recorded exactly as you want it on the title.
- 3
Verify the property description
Check the lot number, plan number, title reference, and address match the property you inspected. For strata properties, verify the unit number and strata plan. Errors in the property description can cause serious problems at settlement.
- 4
Review the price and deposit terms
Confirm the purchase price, deposit amount (typically 5-10% of the purchase price), and when the deposit must be paid. Check whether the deposit is held in a trust account and who holds it. Note whether the deposit is released to the vendor before settlement (this is risky for buyers).
- 5
Check the settlement date and terms
The settlement period is typically 30 to 90 days after exchange but is negotiable. Note whether it is a fixed date or a period (e.g., 42 days from exchange). Understand the penalty interest rate if settlement is delayed by either party.
- 6
Read all special conditions carefully
Special conditions are additional terms negotiated between the parties. Common examples include subject to finance, subject to building and pest inspection, and subject to sale of the buyer's existing property. These conditions override the standard terms. Read every word — this is where many risks hide.
- 7
Review the standard conditions
Each state has standard form conditions that govern the transaction. While these are largely standardised, read them to understand your obligations regarding inspections, insurance, default, and dispute resolution.
- 8
Examine all annexures and attachments
Contracts typically include annexures such as the title search, deposited plan, zoning certificate (Section 10.7 in NSW), drainage diagram, and any Section 32 Vendor Statement (VIC). Review each document — they form part of the contract and contain critical property information.
- 9
Check inclusions and exclusions
The contract should list what is included in the sale (fixtures and fittings like curtains, light fittings, dishwasher) and what is excluded. If the vendor promised to include specific items during inspections, ensure they are listed in the contract.
- 10
Note the GST and tax provisions
Check whether the sale is subject to GST (most residential sales are not, but new properties, commercial properties, and vacant land may be). Also check the land tax adjustment and council rate adjustment provisions.
Key Sections to Check in Detail
Vendor Disclosure
The vendor is required to disclose certain information about the property. What must be disclosed varies by state — see our guide to vendor disclosure obligations across Australia for a full breakdown. In Victoria, the Section 32 Vendor Statement is a comprehensive disclosure document. In NSW, the contract annexures serve a similar purpose. Check that all required disclosures are included and that the information is accurate and complete.
Easements and Encumbrances
The title search (attached to the contract) will show any easements, covenants, caveats, or restrictions registered against the property. An easement grants someone else (such as a utility company or neighbour) the right to use part of your land for a specific purpose. A covenant may restrict what you can build or how you use the property. Understand every encumbrance listed on the title before signing.
Deposit and Release Provisions
The standard position is that the deposit is held in trust by the vendor's agent or solicitor until settlement. However, some contracts include an early release of deposit clause, allowing the vendor to access the deposit before settlement. This is risky — if the sale falls through, recovering an already-released deposit can be difficult and expensive. If your contract includes early deposit release, discuss the risks with your conveyancer.
Default and Termination
Understand what constitutes a default under the contract and the consequences. Typically, if the buyer defaults (fails to settle), the vendor can terminate the contract, keep the deposit, and sue for damages. If the vendor defaults, the buyer can seek specific performance (forcing the sale) or terminate and seek damages. Check the notice periods and cure periods for defaults. Our guide to exchange of contracts explains the legal implications of each stage in detail.
Adjustments at Settlement
The contract will specify how council rates, water rates, strata levies, and land tax are adjusted between buyer and seller at settlement. Typically, these are apportioned on a daily basis as at the settlement date.
State-Specific Contract Formats
Australian property contracts vary significantly by state. Each state uses different standard form contracts and has different mandatory annexures and disclosure requirements.
Contract Formats by State
| State | Standard Contract Form | Key Annexures / Disclosures | Unique Feature |
|---|---|---|---|
| NSW | Contract for the Sale and Purchase of Land (2019 edition) | Title search, deposited plan, S.10.7 zoning certificate, drainage diagram, strata records (if applicable) | Vendor must attach prescribed documents before exchange; no separate disclosure statement |
| VIC | Contract of Sale of Real Estate (REIV/Law Institute form) | Section 32 Vendor Statement with title, planning, building, owners corporation details | Section 32 must be provided before signing; buyer can rescind if materially defective |
| QLD | REIQ Contract for Houses and Residential Land / Contract for Residential Lots in a CTS | Title search, disclosure statement, pool safety certificate, neighbourhood dispute disclosure | Separate standard forms for houses vs community title lots; seller disclosure statement |
| SA | REISA Contract for Sale of Real Property | Form 1 Vendor Statement (title, encumbrances, rates, zoning, building compliance) | Form 1 must be served before or at time of contract; no penalty for cooling-off exercise |
| WA | REIWA Joint Form of General Conditions | Title search (buyer typically conducts own searches) | No mandatory vendor disclosure; no statutory cooling-off for private treaty sales |
| TAS | REIT Contract for Sale of Real Estate | Vendor disclosure, title search, property information | Vendor disclosure requirement under Property Agents and Land Transactions Act 2016 |
| ACT | ACT Law Society Standard Contract | Title search, building/pest reports, energy efficiency rating, compliance certificates | Building and pest reports must be attached to contract; energy rating mandatory |
| NT | REINT Standard Contract of Sale | Title search (limited mandatory vendor disclosure) | Less prescriptive disclosure regime; buyer assumes greater investigation responsibility |
Common Mistakes When Reading Property Contracts
- Skimming instead of reading: Contracts are long and dense, but every clause matters. Do not skip sections just because they look like "standard" legal text. The standard terms define your rights if things go wrong.
- Ignoring special conditions: Special conditions are the most important part of the contract for buyers. They can include — or omit — protections that significantly affect your risk. Read each special condition carefully, particularly the subject to finance clause.
- Not checking the annexures: The title search, zoning certificate, and other annexures contain critical property information. An easement on the title could prevent your planned renovation. A zoning overlay could restrict future development.
- Assuming verbal promises are binding: If the agent or vendor promised something verbally (such as including an appliance or completing repairs), it must be written into the contract to be enforceable. If it is not in writing, it does not exist.
- Not understanding the settlement timeline: Missing the settlement date can trigger penalty interest or even default. Ensure your finance and preparations align with the contracted settlement date.
- Forgetting to check the vendor's identity: Confirm the vendor named in the contract matches the registered owner on the title. This protects against fraud and ensures the seller has the legal right to sell.
Never sign a property contract without independent legal review. A conveyancer or solicitor experienced in your state's property law will catch issues you might miss, explain your obligations, and negotiate better terms on your behalf. The cost of a contract review ($800-$1,500) is trivial compared to the cost of a problematic purchase.
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Analyse Your ContractRelated Guides
- Special Conditions in Property Contracts — Understand the most common special conditions and how to negotiate them.
- Property Contract Red Flags — Warning signs to watch for in any Australian property contract.
- Section 32 Vendor Statement Explained — Essential reading for Victorian property buyers.
- Property Due Diligence Checklist — The complete checklist for investigating a property before purchase.