Special Conditions in a Contract of Sale Explained

Every standard contract of sale used in Australia contains a set of general conditions that apply automatically, covering things like settlement mechanics, risk, and default. Special conditions are additional clauses that buyer and seller negotiate and add to that standard contract, tailoring it to their specific circumstances. They can protect a buyer who needs finance, a seller who needs time to find a new home, or either party dealing with something unusual about the property. Understanding what special conditions can and cannot do is essential before you agree to any of them.

How Special Conditions Differ From General Conditions

General conditions are the printed, standard terms that come with the contract form used in your state and apply to every sale using that form, regardless of the property. Special conditions are added on top, usually in a schedule or annexure, and are specific to the negotiation between the particular buyer and seller. If a special condition conflicts with a general condition, the special condition usually takes precedence, which is exactly why careless drafting can have serious unintended consequences. A conveyancer reviewing a contract during a residential purchase pays close attention to how special conditions interact with the rest of the document, not just what they say in isolation.

The Finance Clause

One of the most common special conditions is a finance clause, making the contract conditional on the buyer's lender approving a loan by a set date. This clause typically names the lender, states a deadline, and sets out what happens if finance is not approved by that date, usually giving the buyer the right to terminate and recover their deposit. Without this clause, a buyer who signs a contract before finance is fully approved is taking on real risk, since an unconditional contract obliges them to settle regardless of whether their loan comes through.

Building and Pest Inspection Conditions

A building and pest inspection condition makes the contract subject to the buyer obtaining satisfactory reports within an agreed timeframe. If the reports reveal significant structural issues or termite activity, this clause typically allows the buyer to negotiate repairs, a price adjustment, or termination, depending on how it is worded. Precision matters here more than almost anywhere else in the contract, since a vaguely worded inspection clause, for example one that lets a buyer terminate for any reason at all rather than a genuinely unsatisfactory report, can be challenged as effectively giving the buyer an unrestricted right to walk away.

Sale of Another Property

Buyers who need to sell their existing home before completing a purchase sometimes negotiate a special condition making the new contract conditional on their own sale settling. Sellers are often reluctant to accept this type of clause because it introduces uncertainty into their own settlement timeline, and it is common for a seller to agree only if they retain the right to keep marketing the property and accept a better offer if one comes along, subject to giving the first buyer notice to remove their own condition within a short window.

Sunset and Extension Clauses

Contracts involving construction, subdivision, or off-the-plan purchases often include a special condition tied to a sunset date, after which either party may be able to end the contract if a triggering event has not occurred. These clauses require careful drafting to balance a developer's need for flexibility against a buyer's need for certainty. Our dedicated guide on what a sunset clause is and how it works covers this specific type of condition in more depth.

Why Vague Drafting Undermines a Special Condition

A special condition is only as useful as its wording. Clauses that rely on subjective standards, such as a buyer being "satisfied" with something, without defining what satisfaction means or how it must be evidenced, are more likely to be disputed and, in extreme cases, held to be void for uncertainty. The South Australian Law Handbook's discussion of special conditions in a contract of sale makes the same point, noting that conditions need clear timeframes and criteria to function as intended rather than becoming a source of dispute themselves. This is general information rather than legal advice, and a solicitor or conveyancer should review the specific wording of any special condition before you sign.

Negotiating Special Conditions Before Exchange

Special conditions are agreed before contracts are exchanged, which means the time to raise concerns is during the offer and negotiation stage, not afterwards. If you are selling in Victoria or buying in Queensland, the standard forms differ slightly in how special conditions are attached and numbered, but the underlying principle is consistent everywhere: anything you want the contract to guarantee needs to be written down precisely, with dates and clear criteria, rather than assumed or agreed verbally.

Removing Special Conditions Once They Are Satisfied

Most special conditions require a positive step to formally satisfy or waive them, such as a letter from the buyer's conveyancer confirming finance has been approved, or written confirmation that building and pest reports came back satisfactory. Until that step happens, the contract remains conditional, even if both parties privately believe the condition will be met. Leaving this informal, for example proceeding towards settlement on the assumption that finance is fine because nobody has raised an issue, creates unnecessary risk. A conveyancer will usually confirm in writing to the other side's conveyancer once each condition is satisfied, so there is a clear record of exactly when the contract became unconditional.