A contract condition sets out something that must happen, or a requirement that must be met, before the parties reach the next stage of the transaction. Finance and building and pest conditions are common examples, although the conditions included in a contract vary.
In simple terms, complying means doing what the condition requires, by the deadline, and giving any notice the contract requires.
The exact process varies by state and contract
NSW, Queensland and Victoria don't all use the same conditions or notice requirements. The steps below describe the common practical approach, but your contract determines what applies to your purchase.
If you miss the relevant deadline, you may lose the ability to rely on that condition, depending on the contract and applicable state rules. That can mean you no longer have the contractual right to terminate on that particular ground.
Is a finance condition the same as a building and pest condition?
The practical process is similar, but the actual test is different. A finance condition is concerned with whether the required finance has been obtained. A building and pest condition is concerned with what the inspection finds, and what the contract allows you to do about it.
The compliance sequence, step by step
- Mark and diarise the deadlines. As soon as you sign, record every relevant deadline in the contract, including any finance, building and pest or other condition dates that apply to your purchase.
- Act early. Submit your loan application and supporting documents, and book your inspector, straight away. Don't wait until the deadline is close. Give your lender and inspector as much time as possible to complete their work.
- Review the results early. Review what comes back while there is still time to understand what it means for the purchase, and what options the condition gives you. A building report might identify anything from minor maintenance to issues that materially change how you view the property.
- Give any required notice before the deadline. If the condition requires written notice, make sure it is given in the way, and by the deadline, that your contract specifies. Telling your conveyancer that you want to rely on the condition is not necessarily the same as the required notice being given to the other party.
The practical principles
- Deadlines can arrive while you're still waiting for someone else. A lender, inspector or other third party may still be working when your contractual deadline arrives. That's why it's important to know the date early and speak to your conveyancer before it becomes urgent.
- Treat the deadlines as important. Some contracts make time critical, and missing a deadline can have contractual consequences. Check the specific condition in your contract rather than assuming a late notice can simply be fixed afterwards.
- If something turns up, understand your options. If the inspection or your finance raises an issue, the options available to you depend on the condition and the contract. You may be able to proceed, negotiate with the seller, or rely on a contractual right to terminate if the relevant requirements are met.
What happens if you don't comply
Missing a condition deadline can matter because you may lose the ability to rely on that condition. If you then cannot complete the purchase, there may be further consequences under the contract.
If you're approaching a deadline and aren't sure what it means, speak to your conveyancer before it passes.
Read the version for your state
Whether these conditions even appear in your contract, and exactly how notice must be given, varies: NSW, QLD, or VIC.
This is one reason it helps to have your conveyancer tracking the contract deadlines with you, particularly when a condition is approaching its expiry.
Common questions
What happens if I miss a contract condition deadline?
You may lose the ability to rely on that condition, depending on the contract and the state. If you think you may miss a deadline, contact your conveyancer before it passes rather than afterwards.
Do I need to tell my conveyancer before the deadline?
Yes. Tell your conveyancer as soon as you know you may need to rely on a condition. They can check what the contract requires and help make sure any required notice is given correctly and on time.
What happens if my building and pest report finds a problem?
That depends on the condition in your contract. You may have options to proceed, negotiate, or terminate if the relevant requirements are met. The report describes the property; the contract determines what you can do about it.
