House and land: what to check in both contracts before you sign

Two contracts, not one

A house and land package is advertised as a single price, but you sign two separate contracts:

• A land contract with the developer, usually for a lot that has not yet titled — an off-the-plan purchase
• A building contract with the builder, for a home on that lot

They are different agreements with different parties. Each has its own deposit, its own cooling-off rules, its own timeline and its own risks — and a problem with one does not automatically end the other.

The split has one large benefit: stamp duty is generally charged on the land rather than the finished home, which is why the duty on a package is usually far lower than on an established home at the same price. It also means there are two documents to read properly, not one.

I am a mortgage broker, not a lawyer. What follows is what matters for your finance. Your conveyancer or lawyer is the person to review the contracts themselves — and they should see both before you sign either.

The land contract

The deposit

For an off-the-plan land contract, the deposit cannot be more than 10% of the price. It is held in trust until settlement. Some developers accept a deposit bond or guarantee instead of cash; ask if that would suit you better.

What matters most is what happens to it if you cannot settle. If the finance is not there when the land titles, you risk losing the deposit and may be liable for more under the contract. That is the risk the rest of this guide is about.

The sunset date

An off-the-plan contract has a sunset date — the date by which the plan of subdivision must be registered. If it has not been registered by then, the contract can be ended.

In Victoria, a developer cannot simply end the contract once the date passes. Under the Sale of Land Act, it must either get your written consent, after giving you at least 28 days’ notice and its reasons, or obtain an order from the Supreme Court.

For your finance, the sunset date also tells you something useful: the longest the wait could run under the contract. A loan approval lasts three to six months, so if the sunset date is two years away, plan on being reassessed close to titling rather than relying on the approval you get at signing. The titling delays guide covers how to protect your position through that wait.

Changes to the lot before it titles

Until the plan is registered, the lot exists only on paper. Off-the-plan contracts usually allow the developer to make some changes. Check what the contract lets the developer change — the area, the boundaries, easements — and at what point a change entitles you to end the contract.

The vendor statement and the estate’s rules

The vendor statement (the “section 32”) sets out the title, easements, covenants and planning controls. In a new estate, also look for the design guidelines: rules about the facade, materials, fencing, driveway and landscaping, and sometimes a time limit to start or finish building.

These matter for your finance in two ways. Many estates require the developer to approve your house design before you can apply for a building permit, so a slow design approval delays the build and everything that follows. And guidelines that require particular materials or front landscaping are costs you will need to fund.

Cooling-off, and the finance clause

A land contract bought by private sale generally has a cooling-off period of three clear business days. If you cool off, you are refunded everything except $100 or 0.2% of the price, whichever is more. There are exceptions — buying at auction is one — so ask your conveyancer whether it applies to yours.

A “subject to finance” clause is common in established purchases. In an off-the-plan land contract it is often absent, or it expires within weeks of signing — long before the land titles. Do not assume a finance clause protects you at settlement. Usually it does not.

The building contract

Fixed price, and what is not fixed

Most building contracts quote a fixed price, but not every line in them is fixed. Prime cost items and provisional sums are allowances — estimates for things not yet selected or not yet known. If the real cost comes in higher, you pay the difference.

Ask what each allowance covers, and whether it is realistic. A contract with low allowances looks cheaper on paper and costs more in practice.

Site costs

Site costs cover preparing the land — excavation, fill, rock removal, retaining walls, extra slab work on reactive soil. Until a soil test and survey are done, they are often an estimate. Ask whether the site costs in your contract are fixed, or can change once the soil test is back.

This is where a package most often moves after signing, and the extra money has to come from somewhere: your savings, or a larger loan that the lender has to approve again.

What the price leaves out

The contract price is rarely the cost of a home you can live in. Driveways, fencing, landscaping, floor coverings and window coverings are frequently excluded, and usually have to come from your own pocket rather than the construction loan. List what is excluded, price it, and budget for it before you sign.

The payment schedule

For a contract covering every stage, Victorian law sets the most a builder can ask for at each one: a deposit of up to 5% for contracts of $20,000 or more, then up to 10% at base, 15% at frame, 35% at lock-up and 25% at fixing, with the balance at completion. A builder can ask for less at a stage, but not more.

Those limits are set to move into new regulations, with the new laws taking effect by 1 December 2026, so check what applies on the day you sign.

The schedule matters for your finance because each payment is a draw on your loan, and you pay interest on everything drawn while you may still be paying rent. The construction loan calculator works it through stage by stage, and shows the month it peaks.

Building time, delays and damages

The contract states how long the build should take, and usually what the builder pays you for each week it runs late — often called liquidated damages. Check the amount, and the grounds on which the builder can extend the time, such as weather.

A delay is not just an inconvenience. Every extra month is another month of rent and interest, and a delay long enough can push the build past the point your budget allowed for.

Variations

Any change after signing — a different benchtop, a wider garage, an extra power point — is a variation. It must be in writing, with its price. Once your loan is approved, variations that add cost need the lender’s agreement, and the extra has to be funded by you or by an increase to the loan.

The new building contract laws also change the rules on price rises and variations. If your contract includes a clause letting the builder raise the price, ask your lawyer exactly what it allows.

Registration and Home Warranty

Check your builder is registered with the Building and Plumbing Commission, using its practitioner search.

For eligible building contracts signed from 1 July 2026, new homes are covered by Home Warranty, provided by the Building and Plumbing Commission. It replaced domestic building insurance for new contracts, and the Commission explains which applies to yours. Ask the builder for evidence of cover — your lender will usually want it before releasing the first payment.

Cooling-off on the building contract

You have five business days from receiving a signed copy of the building contract to change your mind. The builder can keep $100 and any out-of-pocket expenses you approved, and must refund the rest.

One catch: the cooling-off right does not apply if you had a lawyer check the contract before you signed. A proper review is still worth far more than five days — but it is the protection instead, so make sure it actually happens.

What your lender will ask for

A construction loan is assessed on the contracts as much as on you. Expect a lender to want:

• The signed building contract, with plans, specifications and the list of allowances and inclusions
• The land contract, and at settlement, the registered title
• Evidence of the builder’s insurance cover, and in time the building permit, before construction money is released
• A valuation on completion — the valuer values the finished home from the plans. If it comes in below the land and build total, the gap has to come from you

Most lenders want a fixed-price contract. Cost-plus contracts and owner-builder arrangements are much harder to finance, and some lenders will not consider them. Large allowances can also be treated cautiously, because they are the part of the price nobody yet knows.

Before you sign: a checklist

• Both contracts reviewed by a conveyancer or lawyer — the building contract ideally by someone who reviews building contracts regularly
• A proper borrowing capacity assessment, done before you sign rather than after — the borrowing power calculator is a starting point
• The sunset date noted, and a plan for being reassessed close to titling
• Whether the building contract can be ended if the land contract or finance falls through, and at what cost
• Which costs are fixed and which are allowances, and whether the site costs are final
• Every exclusion priced, with a buffer on top — the buying costs calculator helps
• The estate’s design guidelines read, and their costs counted
• The builder’s registration checked, and the insurance cover confirmed

The short version

A house and land package is two contracts, and the finance has to work for both — through a wait you do not control. The decisions that make it work happen before you sign: which costs are fixed, how long the wait could run, what happens if one side falls over, and whether your budget survives a delay. Have both contracts reviewed, and talk to a broker before you commit, not after.