Understanding special conditions in a property contract for sale

Purchasing a property is likely to be one of the biggest investments you will make and so it is important to know what you are getting yourself into. Once you have found a property you wish to purchase, the first step is to review the Contract for Sale. Often, the contract will contain terms and special conditions regarding the sale of the property that are worded in such a way so as to benefit the vendor (seller). As a purchaser, it is important that you understand what those clauses and special conditions are, what they mean and what your rights and obligations are under the contract.

What are special conditions?

Special conditions in a property contract are additional conditions attached to the sale of the property outside of the standard conditions you would normally see in the contract. It is common practice to include special conditions, but they may differ from contract to contract, or may be worded slightly differently in each contract.

Special conditions provide that extra layer of protection to the vendor (and in some cases, the buyer) to account for extenuating circumstances where the sale may not go according to plan.

Given the way in which special conditions are often worded, it is always a good idea to have an experienced property lawyer review the Contract for Sale and advise on particular special conditions to ensure that you as the purchaser understand what you are signing and there are no surprises.

Common special conditions you may see in a Contract for Sale

You can often negotiate the special conditions with the assistance of a property lawyer and conveyancer so that you are not disadvantaged should any unforeseen circumstances arise during the settlement period. Some of the most common special conditions you may see in a contract can include:

Penalty clauses – nearly all contracts contain provisions on what penalties apply if the purchaser does not settle on time. It may include interest charged at a particular rate or fees charged for delaying, cancelling and/or rescheduling settlement. Whilst the transaction may go through smoothly, it is still helpful to know what happens if settlement does not take place on time, as the purchaser will be liable to pay penalties if they are at fault for the delay in settlement. A property lawyer can often help negotiate the fees and interest rate down to reduce any potential costs you may incur, with the agreement of the vendor’s solicitor or conveyancer.

• Release of deposit clauses – another common clause in the contract is where a deposit can be released to the vendor early (i.e. prior to settlement) to fund the vendor’s subsequent deposit or stamp duty on a property purchase for themselves. It is important to look out for clauses like this so that your deposit is not used before settlement is finalised and without your authority.