Don’t Sign a NSW Contract Before You Understand These 5 Clauses
Buyers often feel they must sign quickly to secure a property. In that rush, they skim contracts or rely on someone saying “it’s just the standard contract”. The trouble is that small variations inside those “standard” documents can have very non‑standard consequences. The clauses most likely to cause problems are not the ones printed in bold headings. They are usually buried mid‑page or tucked away in special conditions.
One clause that repeatedly causes issues is the finance or “subject to loan approval” provision – or its absence. Buyers sometimes assume that mentioning pre‑approval to the agent translates into a contractual right to walk away if the bank does not approve. It does not. If the contract has no finance clause, or if the clause has very tight dates and complicated notice requirements, the buyer may be legally bound even when finance falls through. The mistake is not asking what the contract actually says about finance before signing.
Another area is building and pest conditions. Many buyers think these clauses give a simple “get out of jail free” card if an inspection report shows anything negative. In reality, some conditions only allow termination for major structural issues, others require the buyer to give the seller a chance to rectify, and some give very short timeframes to act. Buyers run into trouble when they assume any defect equals a right to walk away, only to discover the condition is much narrower than their expectations.
Default and interest clauses are also frequently overlooked. These provisions set out what happens if settlement is delayed, who pays interest, and how it is calculated. They can be surprisingly harsh. A buyer might not realise that a short delay caused by their bank could trigger daily default interest at a high rate, plus other costs. The clause seems theoretical at signing, but becomes painfully real if finance is even a few days late.
Special conditions can be the most dangerous, because they are often drafted by one party’s lawyer to protect that party’s interests. Sellers may include conditions about early release of deposit, adjustments for works not yet completed, or limitations on the buyer’s rights to object to defects in title. Buyers sometimes agree simply because they are focused on price and settlement dates, not the detailed consequences of these customised terms.
Finally, “entire agreement” and warranty clauses often limit a buyer’s ability to rely on verbal statements made by agents or sellers. A buyer might feel comfortable because of representations about approvals, past flooding, or future development. But if the contract says that only what is written counts, and that the buyer is not relying on external statements, trying to enforce those verbal assurances later can be difficult.
None of these clauses are inherently unfair in every case. The problem arises when buyers do not realise how they work in practice. The safest time to find out is before signing, when there is still an opportunity to negotiate, clarify or walk away. Once the contract is executed, the scope for change shrinks dramatically, and “I didn’t realise” carries little weight.
Declaration: This article is intended as general information only and is not legal advice. Because every property matter is different, you should obtain advice specific to your circumstances before making any decisions. To discuss your situation, contact JKA & Co Conveyancing for tailored advice.