Before you sign: key issues to consider prior to exchanging residential contracts in NSW

New

Tuesday, 15 Sep 2026

Purchasing a residential property is one of the largest financial commitments anyone will make. Whether you are buying your first home, upgrading to accommodate a growing family or acquiring an investment property, it is important to understand how the purchasing process works in New South Wales (NSW) before you commit.

Unlike many other Australian jurisdictions, buying property in NSW centres around the exchange of contracts. Once contracts are exchanged, the purchaser is generally legally bound to complete the purchase, making it essential to identify any legal or practical issues beforehand.

With demanding schedules and limited time to navigate complex legal documents, utilising an experienced property lawyer to review the contract before exchange can provide confidence in the process.

Understanding the exchange of contracts

Before a residential property can be marketed for sale in NSW, the vendor must have a Contract for Sale of Land prepared by a solicitor or licensed conveyancer.

Once the parties agree on the purchase price, deposit and settlement date, the selling agent will usually prepare a sales advice for the legal representatives.  An accepted offer alone is not legally binding.

The purchaser and vendor then each sign an identical counterpart of the Contract for Sale. Those signed counterpart contracts are formally exchanged between the parties' legal representatives (or, in some cases, the selling agent). It is the exchange of the signed counterpart contracts, rather than the acceptance of an offer or signing alone, that creates a legally binding agreement.

Following exchange:

• both parties are generally required to complete the transaction;
• the purchaser becomes legally committed to the purchase (subject to any cooling-off rights or contractual conditions); and
• settlement usually occurs around 42 days after exchange, although this can be negotiated.

Ensure your finance is ready

Unlike many other states, NSW contracts are generally not subject to finance.

Where possible, purchasers should obtain unconditional finance approval before exchanging contracts. Depending on the lender's requirements and the purchaser's circumstances, this may be available before exchange, although some lenders will require an exchanged Contract for Sale or additional information before issuing formal approval.

If finance is declined after exchange, you may lose your deposit and may also be liable for the seller's losses if the property is later resold at a lower price. If unconditional finance approval has not yet been obtained, you should liaise with your lender or mortgage broker regarding the status of your finance application before exchanging contracts.

Arrange building and pest inspections

A legal review identifies legal issues affecting the property, but it does not assess its physical condition.

Building and pest inspection conditions are not standard in NSW contracts.  Purchasers should arrange inspections before exchange or ensure suitable contractual protections exist during the cooling-off period.

Identifying significant defects before exchange may allow you to renegotiate the purchase price, request repairs or decide not to proceed with the purchase.

Review the strata records

If you are purchasing an apartment, townhouse or other strata property, reviewing the strata records before exchanging contracts is an important part of your due diligence.

A strata records inspection may reveal:

• proposed special levies;
• significant building defects;
• ongoing disputes;
• major maintenance or capital works;
• by-laws affecting the property; and
• the financial position of the owners corporation.

Understanding these matters before exchange can help you assess the ongoing costs, responsibilities and potential risks associated with owning a strata property, allowing you to make a more informed purchasing decision.

Understand the cooling-off period

Most private treaty residential purchases in NSW include a five business day cooling-off period after exchange.  During this period, a purchaser may rescind the contract, although a penalty equal to 0.25% of the purchase price generally applies.

Cooling-off rights do not apply in every circumstance, including:

• properties purchased at auction;
• contracts exchanged immediately following an auction; or
• where the purchaser has waived the cooling-off period by providing a section 66W certificate.

Confirm what is included in the sale

Not everything visible during an inspection automatically forms part of the sale.

The Contract for Sale should clearly identify which fixtures and inclusions will remain with the property. If you expect items such as kitchen appliances, light fittings, curtains, security systems, television brackets or garden structures to remain, these should be confirmed before contracts are exchanged to avoid disputes before settlement.

What we look for during a contract review

Before you exchange contracts, we review the Contract for Sale, title and supporting documents to identify legal and practical issues that may affect your purchase. Depending on the property, our review may include:

• unusual or onerous special conditions that may expose you to unnecessary risk;
• title issues, including easements, restrictive covenants, caveats and other restrictions affecting the property;
• planning and zoning matters, including heritage listings, bushfire or flood planning controls, sewer infrastructure and other matters that may affect the property's use or future development;
• finance and building and pest inspection requirements, and whether any additional contractual protections should be negotiated;
• for strata properties, reviewing the strata records to identify proposed special levies, building defects, disputes, major maintenance works, by-laws and the financial position of the owners corporation;
• confirming the fixtures and inclusions that will remain with the property; and
• any amendments that should be negotiated with the seller before contracts are exchanged.

A thorough contract review before exchange helps purchasers understand the legal and practical risks associated with the property, make informed decisions and, where appropriate, negotiate better contractual protection before becoming legally bound.

Conclusion

Exchanging contracts is one of the most important stages of purchasing a property in New South Wales. Once contracts are exchanged, purchasers are generally legally bound to complete the purchase. It is therefore important to understand the contract, investigate the property and ensure any finance or inspection requirements have been addressed beforehand.

Obtaining legal advice before exchange allows potential issues to be identified while there is still an opportunity to negotiate amendments, seek further information or reconsider the purchase. Taking these steps early can help minimise legal and financial risks and provide greater confidence throughout the purchasing process.

We can help you 

At Avant Law, our experienced property lawyers assist purchasers at every stage of the conveyancing process. From reviewing contracts and advising on title issues to managing settlement, we help ensure our clients are well informed and protected before making important investments.

If you have any questions, or would like more information about how we can assist you before you sign the contract, please call 1800 867 113, or to organise a confidential discussion at a time that suits you, please click here.