June 2025 – Hannah Phelps
New to the game? What first home buyers should look out for in NSW sale contracts
Buying your first property is an exciting, yet often overwhelming experience. It is crucial to understand that when you purchase a home, you are entering a legally binding contract. Knowing your rights and obligations is essential.
Some key things to check on the front page of the contract are:
- Completion Date
The contract will specify a completion date, either as a time period (e.g. 42 days) or a specific date. This is the date when the property will settle, and you will officially become the owner. On this date, you will need to be able to pay the full purchase price. Many contracts have a penalty interest clause so be careful to allow enough time.
- Stamp Duty
If you are a first home homebuyer, depending on the purchase price, you may be exempt from or eligible for discounts on stamp duty. You will be exempt from paying stamp duty if the purchase price is below $800,000 and you will be eligible for a reduced rate if the purchase price is between $800,000 and $1,000,000. Be mindful that stamp duty must be paid within three months or on the settlement date, whichever comes first. Remember to factor in this major cost when setting your budget.
- Inclusions and Exclusions
Ensure that the inclusions and exclusions listed in the contract are correct. These refer to the fixtures and fittings that will either stay in or be removed from the property upon settlement. Double check that everything you expect to remain in the property is listed in the contract.
Cooling-Off Period: Sale contracts in New South Wales are subject to a 5 business day cooling off period. This period begins on the date of exchange (when the contract is signed and dated) and automatically expires unless you take action to extend or cancel it. The cooling off period gives you time to conduct due diligence, such as obtaining building and pest inspections or a strata report and seeking legal advice. If you decide to cancel the contract during the cooling off period, you will lose your 0.25% deposit.
If you have already completed your due diligence before signing the contract, you can waive the cooling off period by obtaining a Section 66W Certificate from your solicitor. Many sellers expect a waiver of the cooling off period.
Title Search: A title search will reveal any easements, covenants, or other restrictions that may affect your use of the property. Be sure to check for anything beyond a mortgage, as these could limit your plans for or use of the property.
Special Conditions: Carefully review any special conditions in the contract, as these are the terms you will be bound by once the contract is exchanged. Make sure you understand all requirements and obligations.
Council Planning Certificate: This certificate provides information about the permitted use of the land, including factors like zoning, heritage status or flood risk. It is essential to know what you can and cannot do with the property before proceeding.
Deposit: You will have to pay a 10% deposit (unless you have negotiated a 5% deposit) on exchange so ensure that you have the cash ready to pay into the real estate agent’s trust account when signing the contract.
The most important thing is to always seek legal advice before entering into any contract. A solicitor will guide you through the process, ensuring that you’re fully aware of your rights and obligations.