Signing a property contract feels like crossing the finish line. You’ve found the right place, your offer has been accepted, and now you’re picturing move-in day – or your investment gains. But before you let that pen hit paper, it’s worth slowing down. Property contracts aren’t just formalities; they’re dense legal documents that can lock you into financial and legal obligations you didn’t see coming.
The excitement of closing a deal can make anyone eager to move fast. Unfortunately, that’s when costly mistakes happen. Hidden clauses, vague terms, and rushed timelines can expose you financially, legally, and emotionally. This blog will walk you through what to look for before signing, from risky contract clauses to ways to protect yourself.
Let’s start with what hides in plain sight: those tricky little clauses that can become big problems.
The Sneaky Clauses That Could Cost You Big
You’d be surprised how much impact a single line in a contract can have. Clauses that can tip the scales are buried in the legalese, often not in your favour. These aren’t always malicious, but are written to protect someone’s interest, and that someone likely isn’t you.
One of the most notorious is the “as-is” clause. On the surface, it sounds fair – you’re buying the property in its current state, but in practice, it can leave you on the hook for expensive repairs or defects you only discover after moving in.
Then there’s the sunset clause. This one sets a time limit on the deal’s validity. If approvals or construction don’t happen by a specific date, the seller can walk away – often with your deposit. In off-the-plan purchases, this clause is especially dangerous. Developers sometimes use it to cancel contracts and resell at higher prices.
Penalty causes can spell trouble, too. Generally, these will kick in the day you miss a settlement date. Life happens – bank delays, paperwork hiccups – but the financial hit can be brutal if you’re late. These penalties aren’t always obvious and often favour the seller disproportionately.
So, what can you do? First, don’t assume any clause is “standard.” Ask questions. Every line in that contract is negotiable until you sign. And if a clause seems vague, that’s a red flag – not just a legal puzzle to solve later. Clarity now saves chaos later.
How to Spot Financial Risk in the Fine Print
Even when the big numbers look right – the purchase price, the deposit amount, the loan approval – it’s the fine print that can mess with your finances. Property contracts are full of little hooks: extra costs, payment traps, and terms that make it harder for you to back out without losing money.
Let’s talk deposits. Sure, it’s normal to put one down. But what happens if the deal falls through? Some contracts make your deposit non-refundable under nearly any circumstance. That means you could lose a big chunk of cash even if your finance falls apart or a building inspection reveals serious issues.
You can also pay the price if you don’t meet the exit penalties in your agreement. Some contracts make it expensive to back out, charge fees, keep your deposit, or even take legal action. These terms are often presented as “just in case,” but they come into play more often than people expect, especially when things like financing fall through.
What is the best way to guard against these risks? Protecting yourself from legal and financial risks means reviewing the contract with an economic and legal mindset. In short, getting your lawyer involved is a must!
Contingency Clauses That Safeguard Your Deal
In property contracts, contingency clauses are your best defence when something falls through for you financially or you have been misled in some way about the property. These little paragraphs are a godsend if things don’t pan out as planned.
One of the most important is the financial contingency. This clause says you can walk away without penalty if you can’t secure a mortgage or loan approval. Without it? You’re stuck, even if the bank turns you down. That means you could be legally required to settle a property you can’t afford – a nightmare scenario no buyer wants to face.
If you’re buying a new build or a property that’s been recently constructed or renovated – it’s worth understanding the statutory warranties that may apply. In NSW, for example, builders are legally required to cover major defects for up to 6 years under the Home Building Act 1989. These legal guarantees protect you from major defects or shoddy artistry for a period usually defined by state or territory laws. For example, in many places, the builder must fix structural faults that appear within six years, and minor defects for up to two.
What’s important here is not just having these clauses but making sure they’re worded clearly and in your favour. Some contracts include these terms vaguely or weakly, which gives the seller more power if something goes wrong.
Why Legal Advice Is Non-Negotiable
There’s no polite way to say this: trying to handle a property contract yourself isn’t an option. Even if you think you know what you’re doing, one small oversight can lead to severe pain later. Property contracts are filled with legal terms, obligations, and time-sensitive traps that can cost you dearly if you don’t know what to look for.
You might be tempted to skim the document and lean on the agent’s explanation, but remember that the agent works for the seller. Their job is to close the deal, not protect your interests. That’s why having a qualified property lawyer review your contract before you sign isn’t just smart – it’s essential.
A good lawyer won’t just read the contract – they’ll dissect it. They’ll point out clauses that favour the seller too heavily, flag terms that might be unenforceable, and explain how the terms line up with your actual goals. They’ll also help you reword or renegotiate problematic sections before they lock you in.
Perhaps most importantly, a lawyer gives you time. When you’re about to sign, there’s often pressure to “move fast” or not delay the process. But your lawyer’s job is to pump the brakes, analyse everything, and ensure the deal works for you, not just the seller or developer.
Final Thoughts
Signing a property contract should be a moment of confidence, not anxiety. Yes, it’s a huge step, but you can take it safely if you know the risks and are prepared to deal with them. From sneaky clauses and hidden costs to the importance of contingency protections and legal review, the details in your contract matter more than you think.
So, before you sign, slow down. Read carefully. Ask hard questions. And get someone in your corner who knows how to find the problems before they become yours. A little diligence now could save you a world of trouble later – and make sure the keys you’re handed come with peace of mind, not a pile of regrets.