Why You Should Always Review a Property Contract Before Auction
Why You Need a Pre-Auction Contract Review Before Bidding
The idea of buying a home or investment property at auction is thrilling, but what many buyers don’t realise is this: auction contracts are unconditional. That means the second you win the bid, you’re legally bound to buy the property.
There’s no cooling-off period. No renegotiation. No backing out.
That’s why a pre-auction contract review is so important. It gives you legal clarity and confidence before you bid, and helps protect you from costly surprises.
The Unconditional Nature of Auction Contracts
At auction, the rules are different. Unlike private treaty sales, auctions don’t come with a cooling-off period in NSW. Once the gavel drops, the contract is legally binding. Also, what many people don’t know is that, if the property is passed in at the auction but you later negotiate to buy the property and contracts are exchanged on the same day as the auction, the contract is legally binding. That is, there is also no cooling off period in this scenario.
So, if you haven’t reviewed the contract ahead of time, you’re taking a big risk, one that could cost you tens of thousands!
What Can a Pre-Auction Contract Review Reveal?
A contract review isn’t just about scanning for typos. It’s a detailed legal check designed to protect your interests and flag any red flags. Here’s what it can uncover:
1. Hidden Risks
- Restrictions or easements on title
- Caveat(s) on title
- Discrepancies in boundary lines or lot descriptions
- Defects or damage not disclosed elsewhere
2. Unfavourable Terms
- “As-is” sale conditions that waive seller obligations
- Strict settlement timeframes
- Release of deposit clause
- Interest penalties for late settlement
3. Legal Clarity
- Ensures all clauses comply with NSW laws
- Highlights conditions that could create disputes later
- Protects your rights if things go wrong post-auction
Understanding What You're Signing
Your contract will outline key terms such as:
- Purchase price and deposit amount
- Settlement date and any special conditions
- Inclusions (e.g. appliances, fixtures, furnishings) and exclusions
- Zoning or planning restrictions
A conveyancer or property lawyer can walk you through these details in plain English so you’re not caught off guard.
Protecting Your Interests Before You Bid
A thorough review gives you the opportunity to:
- Negotiate changes before auction day (e.g. longer settlement, reduced deposit)
- Seek clarification or removal of unfavourable clauses
- Prepare financially based on a realistic picture of the full costs
Even though vendors may not always agree to amendments, you’ll at least know what you’re agreeing to if you proceed.
Ensuring Searches and Inspections Are Covered
Many issues with a property can’t be seen on the surface. A contract review will prompt you to:
- Organise a building and pest inspection
- Obtain a strata report (for apartments or townhouses)
- Check if any outstanding notices or development approvals exist
- Confirm if all approvals for renovations or additions are in place
Financial Feasibility: Can You Really Commit?
A review also helps you assess whether the purchase is financially viable:
- Can you meet the deposit terms?
- Will your finance be approved in time?
- Can you comfortably meet the settlement deadline?
There’s no room to delay once you’ve won, so it’s critical to be ready.
Why It’s Worth the Effort
Sure, reading contracts isn’t exciting. But neither is discovering a boundary dispute, an unapproved extension, or an unexpected special levy for strata units after you’ve bought the property.
Think of a pre-auction contract review as your safety net, it may not be as fun as attending the auction and winning, but it’s the best protection you have in an otherwise high-stakes situation.
Final Thoughts
Buying at auction is fast, final, and legally binding. Don’t get caught out by hidden clauses, legal traps, or financial surprises. A pre-auction contract review empowers you to bid with confidence, knowing exactly what you're getting into.
Want a fixed-fee, fast-turnaround contract review before auction day? Talk to ClickLaw and let our team protect your interests, before you raise your hand.
