Exchange of Contracts in NSW: How It Works, 66W Certificates and the Deposit

If you are buying in Sydney, the contract often turns up before you have finished deciding you even want the place. One day you are at an inspection, the next your agent is asking when you can exchange and whether you will sign a 66W. It is hard to stay confident when you are googling the terms of the contract and your deposit is on the line. Usually at 11pm, on your phone, while the agent waits for an answer.

Here is what exchange actually involves, what the deposit does, and what you give up if you sign a 66W certificate. All of this is NSW only; the rules work differently in the other states and territories.

What is exchange of contracts, and why does nothing bind before it?

Before exchange, there is no deal. Not a handshake deal. Not a “the agent said it’s basically yours” deal. No deal. You can make an offer, the seller can say yes, and either side can still change their mind and walk away. Up to the point of exchange the agreement is usually not binding. That is why gazumping is possible: until contracts are exchanged, a seller can take a better offer from someone else.

Exchange is when the contract becomes binding and the deposit is paid. From that point the price and the terms are fixed, and both sides are committed to completing the sale, subject only to any cooling-off rights.

How does exchange actually happen in NSW?

There are two copies of the contract: one for you and one for the seller. The seller signs their copy, you sign an identical copy, and the two signed copies are swapped. Each side ends up holding the copy the other person signed, which is why they are called counterparts. Only the law could make swapping two pieces of paper sound this complicated. This is usually arranged by your conveyancer or the agent, and is increasingly done electronically rather than on paper, but the effect is the same: once the counterparts are exchanged, you have a binding contract. What you are signing at exchange is the contract for sale of land, prescribed documents and all.

1. Contract reviewed
2. Finance and inspections sorted
3. Both sides sign identical copies
4. Copies swapped and deposit paid

Most of the real work happens before that swap, not after it. The contract should be reviewed, your finance should be sorted, and your inspections before you exchange should be done. Make your offer through the agent and sign nothing; once it is accepted, get the contract to your conveyancer and have it reviewed while there is still something to negotiate, because once contracts are exchanged the terms are fixed. Bring them in early, so they are ready to move the moment you get the yes. After exchange you can raise concerns, but you are bound by the contract you signed, subject only to any cooling-off rights, so the review has to come first.

What happens to your deposit at exchange?

When you exchange, you pay a deposit. It is usually 10 per cent of the purchase price, unless a lesser sum, for example 5 per cent, is agreed. In some cases a buyer pays a small amount, such as 0.25 per cent, to exchange, with the balance payable before the cooling-off period ends, but whether that is available depends on the contract.

The deposit does two jobs. It shows the seller you are serious, and it sits there as something the seller can claim against if you walk away once you are bound. It is normally held in a trust account, usually the selling agent’s or a conveyancer’s, rather than handed straight to the seller, and it is typically released to the seller at settlement. Where it is held, and when exactly it is released, depends on the contract.

Some buyers want to use a deposit bond instead of cash at exchange. A deposit bond is a guarantee that stands in place of a cash deposit, rather than money changing hands. A seller does not have to accept one, so whether you can use a bond depends on the contract and on the seller agreeing to it. If a bond matters to you, raise it early.

The official NSW overview of contracts and deposits is published by the NSW Government.

What is a 66W certificate, and what are you giving up?

Buy an established home by private treaty and you usually get five business days to change your mind, counted from exchange. How those days are counted, and what withdrawing costs, is set out in full in the cooling-off period in NSW. The short version: it is a safety net, not a plan.

A section 66W certificate is the document that waives that cooling-off period. Sellers love them. Your safety net, less so. A 66W certificate can also be used to support an agreed shorter cooling-off period; a shortening agreed with the seller only takes effect once the certificate is given.

A section 66W certificate has to be signed by a solicitor, barrister or licensed conveyancer who is not acting for the seller, after they have explained what you are giving up. In Sydney you are most often asked for one when the seller wants a certain sale: a pre-auction offer, a competitive private sale, or a vendor who will only exchange without cooling off. A buyer usually gives it at or before the contract is made, so the contract binds with no cooling-off period from the start.

What about buying at auction or off the plan?

What happens after exchange?

Once you have exchanged, the sale moves towards completion: searches, finance and the final steps before you get the keys. The length of that gap is set in the contract, and you want your conveyancer moving on it straight away rather than waiting. That stretch has its own rhythm, covered in what happens between exchange and settlement, and the day itself in our guide to what happens on settlement day.

What does this mean for your purchase?

Exchange is the point of no return, or close to it, so the work that protects you has to happen before you sign, not after. None of it is complicated once someone walks you through it, but the order matters, and exchange is the deadline:

1. Have the contract reviewed.
2. Sort your finance.
3. Do your inspections.
4. Make the call on a 66W with your eyes open.

The buyers who find exchange stressful are usually the ones doing the homework in the wrong order, after they are already bound rather than before. Get those steps in order and exchange stops being the scary part; it becomes the moment the place is finally yours to complete on.

If you want that handled properly, Titlespace is a conveyancing law firm based in Sydney acting for buyers in NSW, VIC, QLD and the ACT. See our conveyancing for buyers, or for the local rules start with conveyancing in NSW.

Reviewed by Marc Ryckmans, Legal Practitioner Director, October 2026. Last updated October 2026. This article is general information about exchange of contracts in NSW. It is not legal advice about your transaction.

The content of this blog post is intended as general information and should be considered broad guidance only. It does not constitute legal, financial, or tax advice and should not be relied upon as such. Every property transaction is different, and we recommend seeking personalised advice from a qualified professional before making any investment or legal decisions.