Special Conditions in Sale of Land Contracts

 In Commercial & Property, Conveyancing

Buying or selling property is often one of the biggest financial decisions most people make. It is therefore important to know the ins and outs of your decision to buy or sell property.

When buying or selling land, the sale contract must be in writing. Contracts for the sale of land are usually relatively standard in South Australia and will include standard clauses such as the price of the property and the settlement date (generally known as the standard terms). But sometimes the sale contracts for the sale of land can include clauses that are not standard (known as ‘special conditions’).

It is important for both the seller and buyer of land to understand special conditions and how they should comply with them in order to protect their interests.

What are Special Conditions to Land Contracts?

Special conditions are additional conditions to the standard terms in the contract for sale of land.

They can be included in a contract by either the buyer or seller of the land subject to mutual agreement by both parties.

A special condition should set out the obligations required to fulfil the condition, who must comply with it and at whose cost and what are the consequences of failing to comply with the condition (e.g. a refund, damages for breach of contract or forfeiture of the deposit paid).

The type of special condition that will apply will depend on the particular circumstances. For example:

  • Settlement is subject to the buyer obtaining finance for the purchase of the property;
  • Settlement is subject to the buyer selling its home or obtaining a satisfactory building inspection;
  • Assurances by the seller to the buyer to do something e.g. to repair or to remove rubbish;
  • Buyer’s access to the property for renovations before settlement;
  • Building testing and inspection including soil, pest and contamination assessments; and
  • Pool safety compliance and certificates.

We have outlined below common special conditions a buyer might require in sale contract.

Subject to Finance

A buyer often will need to borrow money from a bank to purchase property. A buyer might request a special condition that the sale contract is subject to their finance being approved by the bank (known as a ‘subject to finance’ clause). This clause allows the buyer time to have their finance approved and funds available by their bank for the the purchase of the property. If the buyer’s finance is not approved, the condition will usually allow the buyer to withdraw from the contract.

It is important for the buyer to understand the timeframes associated with obtaining finance and the methods required to inform the seller of whether finance has been obtained or not. If the timeframe for obtaining finance expires, the seller may terminate the sale contract and enter into a contract for sale with another buyer.

If a buyer intends to seek finance from a bank or lending institution to purchase a property, it is important that the buyer requests a subject to finance clause in the contract. There may be serious consequences to a buyer who intends to purchase with finance but does not include a subject to finance clause in the contract. If the buyer is subsequently unable to obtain finance, then the buyer will still be obligated under the contract to settle and if it fails to settle, it risks forfeiture of the deposit and being sued for damages.

If you are signing a contract which is “subject to finance” it is important to read through the clause to make sure that the terms suit your circumstances. Some standard form special conditions will say that the condition is satisfied if you receive “indicative approval” or similar to the finance request. A prudent buyer should require that the condition is only satisfied where the bank confirms in writing that the finance is granted. We can help ensure these conditions are worded properly.

Subject to Buyer’s sale of home

This type of condition often includes the circumstances where the sale of land is subject to the sale of the buyer’s existing property. This condition will usually set the terms upon the sale of the buyer’s property, such as a time period upon which the buyer has to settle their contract for sale. If the condition is not satisfied then the contract for the sale of land will usually terminate.

Due Diligence

A due diligence condition allows the buyer to conduct an investigation into the property that they intends to purchase (e.g. a building inspection). This condition will often allow the buyer to terminate the sale contract if they are not satisfied with a condition of the property based on their investigations.

This condition will usually place timeframes upon which the buyer has to complete the investigation and then make up their minds on whether or not they wish to continue with the purchase. If a buyer does not complete an investigation in time or fails to inform the seller of their intention to terminate the contract, it may be too late for the buyer to withdraw from the contract without incurring costs or risks. Again, it is important to carefully draft these clauses. For example if you were the buyer, you would want a clause that specifies that you decide if the results of the assessment or inspection are adequate.

There are many other special conditions that are needed from time to time, such as the settlement being subject to the land being subdivided, or other planning or similar approvals, the land being subject to a tenancy or where the sale is to a foreign buyer (in some circumstances).

Why trust Johnston Withers Lawyers as your Conveyancer or your Property Lawyer

At Johnston Withers Lawyers our registered conveyancers and property lawyers have extensive experience in preparing special conditions and explaining the special conditions to parties. If you are a seller, buyer or sales agent and require any assistance with drafting or need advice in relation to any special conditions, please contact Gemma Wallace on (08) 8231 1110 or get in touch online.


The content of this article is intended to provide a general guide to the subject matter. It is not legal advice. Specialist advice should be sought about your specific circumstances.

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