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Conditional Contracts – What and why?

Whether you’re the Purchaser or the Vendor, you have the right to negotiate having conditions that you may require in a sale contract. You may or may not need to put any conditions in your contract, however, conditional contracts are another form of protection you should at least be aware of. And this is further information as to why it is so important to discuss your situation with your Conveyancer before signing any documentation.


As a Purchaser, it may be in your best interest to have a condition in the contract that releases you from an obligation to purchase under certain circumstances that aren’t satisfied. These could include a pest inspection revealing issues, or your finance approval not meeting the requirements.


As the Vendor, it could be that you’re in the process of development planning and land division or construction of new dwellings.

Either way, the conditions in a conditional contract all have a time frame that needs to be adhered to. If that time-frame is almost up and the conditions are not met, the relevant Conveyancer will then ask the other party for an extension through either the other parties Conveyancer or the Agent.

For example, if your finance is due today but the bank’s not ready, as your Conveyancer I would contact the Vendors Conveyancer with a formal request for another week for them to discuss with their client. I’ll also let the Agent know what’s happening to keep them in the loop.

Once all the conditions are met, that’s when the contract is considered unconditional. Some Agents will consider this the date of sale, while others like to wait until settlement occurs.

During the conditional stage, the Purchaser may be able to terminate the contract. That is, under the right circumstances and if the conditions allow. I.e If one of the conditions is that the Purchaser needs a certain amount of finance but the bank won’t come to the party, the Purchaser may terminate the contract. Being as it’s part of the Contract conditions and provided the requirements are met as per the clause in the Contract, then the Purchasers deposit is fully refunded to them.

Likewise, if the pest report comes back with active termites and structural damage, then generally the Purchaser can terminate the contract without penalty. Again, it all comes down to the fine print inserted in the Contract.

One instance where you need to be very cautious is if you purchase at auction, there are no conditions accepted in the Contract. An auction sale moves straight to an unconditional contract with no cooling off period. You must therefore have all your inspections and approvals either completed, or at a stage where you know there won’t be any issues arise.

There’s a lot more to consider with conditional contracts, so feel free to contact me anytime if you have any questions or would like further clarification.