Contract conditions: what they mean and the deadlines that matter

Many property contracts are "subject to" one or more conditions, most commonly a finance condition and a building and pest inspection condition. These can give you a period in which you need to obtain finance, complete an inspection or satisfy another requirement before a specified deadline.

What the condition allows you to do if it isn't satisfied depends on the contract and the state. Missing a condition deadline can affect your rights under the contract, so it's important to know what conditions apply and what you need to do before each deadline.

The exact process varies by state and contract

NSW, Queensland and Victoria don't all use the same conditions or notice requirements. What follows describes the common practical approach, but your contract determines what applies to your purchase.

This guide explains what conditional contracts are, how the process differs from state to state, and what's at stake if a condition lapses.

Key takeaways

• Contract conditions can give you important rights, but those rights are tied to deadlines: the contract may give you a right to terminate if a condition isn't satisfied, but you generally need to meet the condition's requirements and deadlines to rely on that right.
• The approach is very state-specific: in NSW, finance and building and pest conditions are less commonly included in standard residential contracts, so buyers may need to complete more due diligence before exchange. In QLD and VIC they are commonly included, and the process is more prescriptive.
• In some Victorian contract conditions, failing to give the required notice by the deadline can result in the condition being treated as satisfied: see the Victoria explainer for how that works.
• Missing a deadline can affect your contractual rights: what follows depends on the contract, the condition and the state.

1. What a conditional contract is

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.

Where the contract gives you a right to terminate if a condition isn't satisfied, that right generally isn't automatic or open-ended. You generally need to take reasonable steps to satisfy the condition, rather than simply waiting for the deadline to arrive, and to do what the condition requires by the date the contract sets.

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. For the general principles, see the complying with contract conditions explainer.

2. How the process differs by state

How prescriptive these conditions are, and even whether they appear in the contract at all, varies significantly by state. In NSW, finance and building and pest conditions are less commonly included in standard residential contracts, which shifts the emphasis onto due diligence before you're bound. In QLD and VIC they are commonly included, and both states are more prescriptive about the notice you have to give to rely on them.

This is a high-level comparison, not a substitute for checking your contract. The conditions available, deadlines, notice requirements and consequences can vary depending on the contract and the circumstances.

State comparison at a glance

Read the detail for your state: NSW, QLD, or VIC.

3. The deadlines that matter most

If your contract includes these conditions, the dates to watch usually include:

• The finance date: the deadline to have your loan approved, or to notify the seller whether finance is approved, waived or not approved, depending on what the contract requires.
• The building and pest inspection date: the deadline to complete inspections and, where you want to rely on the condition, to give any required notice.

Behind both dates sits a second question: what does the condition actually allow you to do? A building and pest report may identify anything from minor maintenance to significant problems. Whether a particular finding allows you to terminate, negotiate or take another action depends on the wording of the condition and the applicable contract. The report describes the property; the contract determines what you can do about it.

4. What's at risk if you miss a condition

In Queensland, failing to comply with a contract condition can have consequences beyond losing the condition itself, including potentially putting the buyer in default. The specific consequences depend on the contract and the circumstances. See the consequences of buyer default explainer.

In other states, the consequences depend on the condition and the contract.

This is one of the practical parts of conveyancing where having someone track the contract with you can make a difference. Your conveyancer can help identify the conditions, deadlines and notice requirements that apply to your contract.

5. Before you sign, ask these five questions

• Which conditions are in my contract, and what is the exact deadline for each?
• Do I need to give formal written notice to satisfy or rely on a condition, and by what time of day?
• What "reasonable steps" am I expected to take, and can the seller ask me to prove them?
• If an inspection turns up problems, what does my condition actually allow me to do?
• What happens to my deposit, and what else can the seller claim, if a condition isn't met?

Common questions

What is a contract condition when buying property?

A contract condition is a requirement that must be satisfied, or a circumstance that must occur, for a particular contractual right or obligation to apply. Finance and building and pest conditions are common examples, but the conditions in a contract vary by state and contract.

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 a deadline is approaching and you don't yet have the required approval, report or notice, speak to your conveyancer before the deadline.

Does loan pre-approval satisfy a finance condition?

Not necessarily. Pre-approval is an indication from a lender, and it generally remains subject to further checks, including a valuation of the property. The relevant contract may require a different level or form of approval, so check what your finance condition actually requires before assuming your finance position is sufficient. See the finance approval guide.

Can a seller refuse to extend a condition deadline?

An extension generally needs to be agreed with the other party, so a seller can decline. If you're approaching a deadline without the required finance or inspection result, speak to your conveyancer before the deadline rather than assuming an extension will be available.

Can I end the contract under a building and pest condition if the seller offers to fix the problem?

A seller's offer to repair doesn't automatically take away a right to terminate, and it doesn't automatically preserve one either. It depends on the wording of your condition, and in some contracts on whether you are acting reasonably. Negotiating a repair generally doesn't extend the deadline, so speak to your conveyancer before it passes.

What if a condition deadline falls on a weekend or public holiday?

Many standard contracts move a date that falls on a weekend or public holiday to the next business day, but that doesn't apply to every contract or every date. Check how your contract defines business days and deadlines, and don't plan around an extra day without confirming it with your conveyancer.