When both parties have agreed with the terms of the contract for the sale of land, they both sign the contract and the buyer pays a deposit to the seller. This deposit will be a percentage of the value previously agreed.
After exchange the seller holds the property until the date of settlement. At the point of exchange, the agreement has been struck and will stand unless the contract is rescinded by either the buyer or seller.

Processes triggered by the exchange

The exchange of contracts will trigger the following processes:

• The commencement of the 'cooling-off' period (where it is available in your circumstances - for example, this does not apply to property purchased at auction)the cooling off period generally ranges between 3-5 business days, depending upon the laws of the state where the contract is taking place;
• The timing for the payment of the stamp duty. Stamp duty must be paid within 1-3 months of settlement (depending upon the individual laws of the State or Territory). If the duty is not paid within this period a fine may apply.
• Final period before settlement.  This will usually be four to eight weeks between the time the contracts are exchanged and the date of settlement.

The exchange of contracts presents a timetable before settlement in which final inspections, financial arrangements, and the final exchanges must be made.