Step 6 of 6
Contracts, reports and settlement
What is inside a contract of sale, what a strata report tells you, cooling-off by state, and the run to handover.
12 min read · Written for Australian first home buyers
A contract of sale for an ordinary Australian home, with the strata report and building report attached, commonly runs to a few hundred pages. You typically get it days before you have to decide.
Almost nobody reads all of it. The expensive parts are usually four or five clauses and a couple of paragraphs buried in minutes.
What is actually in a contract of sale
| Section | What to check |
|---|---|
| Parties and property | That the seller is the registered owner and the address matches the title |
| Price, deposit and settlement | Deposit amount, when it is payable, and whether the settlement date works for you |
| Title and plan | Easements, covenants, rights of way, and anything crossing the land |
| Inclusions and exclusions | Appliances, blinds, air conditioning, light fittings, remotes |
| Special conditions | The vendor's own clauses, including any right to rescind |
| Disclosure documents | Planning certificate, sewer diagram, strata records where relevant |
Reading a strata report
If you are buying an apartment or townhouse, the strata report tells you more about your future costs than the apartment itself does. Six things matter.
- 1Capital works fund balance
The savings the building holds for major repairs. Compare it to the building's age and size. A thin fund means future levies.
- 2Levies, and their trajectory
What you will pay quarterly, and whether it has been rising. A building that has held levies flat for years is often deferring work, not saving money.
- 3Special levies raised or foreshadowed
Raised levies are visible. Foreshadowed ones appear in minutes as quotes sought, engineers engaged or works being considered. That is the expensive category.
- 4Defects and remedial works
Search the minutes for defect, remediation, engineer, membrane, facade, waterproofing and fire. Waterproofing and fire safety are the most common serious defects in the NSW research.
- 5Litigation
Whether the owners corporation is in dispute with a builder, a developer, an insurer or an owner. Litigation is slow and it is funded by levies.
- 6Insurance
That the building is insured for full replacement, and whether the insurer has imposed any exclusions.
What your conveyancer does, and does not do
A conveyancer or solicitor handles the legal transfer of title. They check the contract, order searches, exchange, adjust rates and taxes, and settle. Engage one before you offer.
What they generally do not do is tell you whether the price is right, negotiate on your behalf, or read three years of strata minutes looking for a foreshadowed levy unless you ask and pay for it. Those are different jobs, and assuming they are covered is a common and expensive mistake.
Between exchange and settlement
- 1Exchange and deposit
Contracts are exchanged and the deposit is paid, commonly 5% or 10%. Any cooling-off period runs from here.
- 2Finance goes unconditional
The lender values the property and issues formal approval. If the valuation is short, this is when you find out.
- 3Searches and enquiries
Your conveyancer orders council, water, title and planning searches, and raises requisitions with the vendor's solicitor.
- 4Final inspection
Usually in the week before settlement. Check that the inclusions are still there and the property is in the condition you agreed.
- 5Settlement
Funds transfer, title transfers, and you get the keys. Most settlements are now electronic and take minutes once everyone is ready.
What you pay at settlement
- The balance of the purchase price, funded by your lender and your remaining cash
- Stamp duty, unless you are exempt as a first home buyer under your state's threshold
- Adjustments for council rates, water and strata levies already paid by the vendor
- Registration and transfer fees
- Your conveyancer's fee and any outstanding search costs
Common questions
What is in a contract of sale?
The parties, the price, the deposit, the settlement date, the title and plan, any easements or covenants, the inclusions, and the special conditions. The special conditions are where the surprises live, because they are drafted by the vendor's solicitor.
What is a vendor rescission clause?
A special condition that lets the seller cancel the contract in defined circumstances, sometimes with little liability to you. It is not standard, it is not always fair, and your conveyancer can ask for it to be removed or limited before you sign.
What does an easement mean for me?
An easement gives someone else a right over part of your land, commonly for drainage, sewer or access. It usually cannot be moved without consent and it can restrict where you build. It is on the title plan, not in the advertisement.
How long is settlement in Australia?
Commonly four to six weeks in New South Wales and Victoria, and thirty to sixty days elsewhere, but the contract sets the date. Longer or shorter settlements are negotiable and can be worth money to a vendor who has a date of their own to meet.
Where these figures come from
- Building Commission NSW - research on serious building defects in strata communities
- Unloan - cooling-off periods by state in Australia
Grants, thresholds and duty rates change. Always check the current rules with the relevant state revenue office or Housing Australia before you rely on a number here.
Every page read, before you sign
TrueBuy reads the contract, strata report and building report and returns findings you can act on, each one quoted from the source.
Information, not legal advice. TrueBuy is not a law firm and does not replace a conveyancer or solicitor. Confirm with your conveyancer before acting.