How Tasmanian real estate contracts are exchanged – and how the cooling-off period works

Buying property in Tasmania works differently to some other states and territories. Understanding these differences can help you avoid costly mistakes.

The following is general information about the Tasmanian contract exchange process and the cooling off period, which may be unfamiliar if you haven’t purchased property in Tasmania before or recently.

1. Contract preparation and exchange

In Tasmania, a property can be advertised for sale without a contract of sale being available, however well prepared sellers and their agents often do have this available when the property is listed for sale so they can transact quickly when an offer is made by private treaty, or made available well before a property is sold at auction.

It is common for the seller’s legal representative (solicitor or licenced conveyancer) to prepare the contract of sale. In some cases, the real estate agent may prepare the contract using a standard form.

Ideally, buyers should obtain legal advice on the contract (if available) before submitting an offer and the team at lawlab can do a contract review quickly to help you buy securely.

Despite this, it is common for offers to be made and accepted and the contract signing process managed by the real estate agent before a buyer receives any legal advice.

Once both the buyer and seller have signed the contract, the agreement becomes legally binding. This point is commonly referred to as “exchange of contracts”, although in Tasmania this usually occurs by both parties signing the one contract rather than physically exchanging counterparts.

For private treaty sales, contracts commonly include special conditions that modify the standard terms, such as:

• a finance approval clause,
• a building and/or pest inspection clause, or
• a sale of prior property clause.

These conditions allow a buyer to terminate the contract if the relevant condition is not satisfied within the agreed timeframe.
By contrast, properties sold at auction are generally sold on unconditional terms, meaning the contract is not subject to finance, inspection or similar conditions.

2. Cooling-off in Tasmania
Unlike some other Australian jurisdictions, there is no statutory cooling-off period in Tasmania.
Instead, most standard form contracts of sale used in Tasmania include an optional cooling-off provision, typically allowing a cooling-off period of three (3) business days. The buyer must elect for this cooling-off period to apply. If no election is made, the cooling-off period will not apply.
If a cooling-off period applies, the buyer may terminate the contract by giving written notice to the seller within the cooling off period.
Where the contract is validly terminated during the cooling-off period:

• any deposit paid must be refunded to the buyer in full; and
• neither party is entitled to compensation from the other.

FAQs about Tasmanian real estate contracts

Q1: Is there a cooling-off period in Tasmania?
There is no statutory cooling-off period in Tasmania. However, most standard form contracts allow the buyer to elect for a three (3) business day cooling-off period to apply.

Q2: Can I make my contract subject to finance approval?
Yes. Finance clauses are common in Tasmania. If included, the contract will usually be conditional on the buyer obtaining finance approval on terms acceptable to them (acting reasonably) within the agreed finance period.

Q3: Are inspections mandatory?
No. Inspections are not mandatory, but they are strongly recommended to identify potential issues with the property that may not be disclosed by the seller.

Q4: What happens if I terminate a contract during cooling-off period?
If the cooling-off period applies and the contract is terminated within that period, the buyer is entitled to a full refund of any deposit paid. Neither party may claim compensation.

Q5: Who handles the contract signing process?
The signing process may be managed by the real estate agent or by the parties’ legal representatives. We recommend obtaining legal advice before signing any contract.

Q6: When should I send documents to my legal representative?
As soon as possible. Early review allows issues to be identified before the contract becomes legally binding.

Sarjit Chohan

Legal Advisor

Sarjit is a senior legal advisor at Lawlab. With a double-degree in both Law and Commerce, he has a strong professional interest in property law and conveyancing. Outside of work, he is passionate about playing soccer and is also quite the movie & television fanatic.