Is there a Cooling Off Period?

The Conveyancing Act 1919 provides that there is a cooling off period for every contract for the sale of residential property, subject to some exceptions below.

The cooling off period commences when the contract is made, being the date when the contracts are signed and exchanged between the parties, and ends at 5:00pm on the 5th business day after the making of the contract.

The cooling off period provides buyer’s with the comfort of knowing the property is ‘off the market’ for the vendor does not have a cooling off period of their own. During the cooling off period the buyer can attend to any tasks which have not been completed as at the signing of the contract, for example:

– obtaining unconditional finance approval

– finalising pest and building inspections

– meeting with lawyer to review and negotiate any changes to the contract

How do I pull out of the contract during the cooling off period?

The buyer can exercise his or her cooling off rights by serving a written notice on the vendor, vendor’s agent or vendor’s solicitor to the effect that the buyer rescinds the contract, meaning that the contract is taken to be cancelled from the start. The notice must be signed by the purchaser or the purchaser’s solicitor (section 66U), so it is not enough for a purchaser to email or call the agent to inform of the the decision to ‘cool off’.

What happens after I have exercised my cooling off rights?

If notice has been given within the cooling off period and in accordance with the requirements of s.66U of the Act then the contract is rescinded, all monies paid by the buyer towards the deposit or otherwise are refunded, save for the sum of 0.25% of the purchase price, often called the ‘holding deposit’ which is forfeited to the vendor.

When do I not get a cooling off period?

There is no cooling off period if:

– the buyer’s solicitor has provided a certificate in accordance with section 66W of the Conveyancing Act waiving the cooling off period

– the property is purchased at auction, or on the day the property went to auction

– the land that is not classified as ‘residential property’ under the Act because the land is too large (2.5 hectares or more) or has more than two dwelling situated within

If you are buying a property then get in touch with one of our property lawyers by contacting your nearest Prime Lawyers office. You can also obtain a no obligation quote by visiting our conveyancing website by clicking here.

We have property and conveyancing lawyers located at Sydney, Parramatta, Sutherland and Wollongong.