| CML LAWYERS
A practical guide from CML Lawyers | Sydney CBD & Cowra NSW |
Exchanging contracts is the moment you become legally committed to buying a property. Once you exchange — with very limited exceptions — you are bound. There is no undoing it without financial consequence.
Yet property buyers routinely exchange without fully understanding what they are agreeing to. The contract is long, the process moves quickly, and the pressure to act can be significant. This guide is designed to make sure you go into exchange with your eyes open.
Here are the five most important things to check before you exchange contracts on any property in NSW.
| 1 | Read the Contract — and Have Your Solicitor Review It
Every vendor in NSW is required to have a Contract for Sale available before listing a property for sale. Get a copy before you make an offer — not after. Your solicitor should review the contract carefully, including all the disclosure documents attached to it: the zoning certificate, drainage diagrams, title documents, and any notices affecting the property. Pay particular attention to: the settlement period (is it realistic for your lender?), any special conditions inserted by the vendor, title restrictions or encumbrances, and the deposit amount and payment terms. A contract that looks standard on the first page can contain unusual conditions buried halfway through.
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| 2 | Check the Zoning and What Can Be Built Nearby
The zoning certificate (Section 10.7 Certificate) attached to every NSW Contract for Sale tells you what the land is zoned under the Local Environmental Plan. Zoning determines what uses are permitted on the property and what your neighbours can build next door. A property that is zoned R2 Low Density Residential today may border land zoned for higher density development. A dream view can disappear if the block behind you has development approval for a five-storey building. This is not hypothetical — it happens regularly in NSW’s changing planning environment. For rural and regional properties, check whether there are any planning proposals or rezonings in progress that might affect the property or surrounding land.
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| 3 | Understand the Title — Easements, Caveats and Restrictions
The title to the property tells you much more than just who owns it. Your solicitor will conduct a title search that reveals: • Easements — rights over your land held by others, such as rights of carriageway (shared driveways), drainage easements (pipes beneath your land you cannot build over), or utility easements giving access to infrastructure. • Restrictive covenants — obligations that restrict what you can do with the property, such as limits on subdivision, requirements for minimum lot size, or restrictions on building materials. These can be decades old and still fully enforceable. • Caveats — third party claims lodged against the title that must be resolved before settlement. For rural and regional NSW properties, also check Crown land boundaries carefully. Fences on the ground do not always match the title boundary.
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| 4 | For Strata — Review the Section 184 Certificate and Levy History
If you are buying an apartment, townhouse or any strata property, the Section 184 Strata Information Certificate is one of the most important documents in the contract. It reveals the financial health of the owners corporation — the body that manages the building. Key things to check: What are the current quarterly levies? Is there a special levy current or proposed? What is the balance of the capital works (sinking) fund? Are there any outstanding defect claims or building works? Are there significant arrears from other owners? From 1 April 2026, new NSW strata reforms require developers of multi-storey buildings to have initial levy estimates independently certified. But for existing buildings, the Section 184 Certificate is your window into how well the scheme has been financially managed. A strata scheme with inadequate reserves and aging common property is a financial liability you are buying into — not just a building.
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| 5 | Confirm Your Finance and Understand the Settlement Date
Two finance-related issues catch buyers out more than any other. First: the difference between pre-approval and unconditional approval. A pre-approval is an in-principle indication from a lender — not a commitment to lend. Final approval depends on the lender’s valuation of the specific property you are buying, your financial circumstances at the time of formal application, and the lender’s credit assessment. If the valuation comes in below the purchase price, your lender may not advance the full amount you expected. Exchanging without unconditional approval carries real risk. Second: the settlement date. Your contract will specify a settlement period — typically 42 days, but sometimes shorter or longer. Make sure this is realistic for your lender. If settlement is delayed because your finance is not ready, you may be in breach of contract and liable for penalty interest or worse. At auction, there is no cooling-off period and no finance condition. You are unconditionally committed from the moment the hammer falls.
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| A NOTE ON THE COOLING-OFF PERIOD
In NSW, a buyer who exchanges contracts privately (not at auction) is entitled to a five-business-day cooling-off period during which they can rescind the contract — but at a cost of 0.25% of the purchase price. On an $800,000 property, that is $2,000 forfeited. If your solicitor signs a Section 66W certificate, the cooling-off period is waived immediately. You are bound from that moment, with no right of rescission. The cooling-off period is not a substitute for proper due diligence. It is a last resort — and it costs money to use. |