What is the cooling-off period for property purchase?

When you buy a residential property in NSW there is a five business-day cooling-off period after you exchange sale contracts.

During this period you have the option to get out of the contract as long as you give written notice.

The cooling-off period starts as soon as you exchange and ends at 5pm on the fifth business day.

Note: A cooling-off period does not apply if you buy a property at auction or exchange contracts on the same day as the auction after it is passed in.

You can waive the cooling-off period by giving the seller a ‘66W certificate’.

This is a certificate that complies with Section 66W of the Conveyancing Act 1919.

The certificate needs to be signed by your solicitor or conveyancer.

If you use your cooling-off rights and withdraw from the contract during the five business-day period, you will have to pay the seller 0.25% of the purchase price.

This works out to be $250 for every $100,000.

Sometimes, there are more buyers looking for homes than there are properties on the market

This is called a sellers’ market.

In this case, you may want to organise a quick contract exchange.

This way you can reduce the possibility of someone beating your offer and get your building and pest inspections done during the cooling-off period.

You will still be able to back out if there is a problem.

However, it is important to have the contract checked by your solicitor or conveyancer before you sign it.

Please refer NSW Fair Trading website.

Why is it applied to purchasers only?

A “cooling-off” period is part of a legally binding contract and in Real Estate it has implications for the Purchaser (ONLY) to act within that period if they decide not to proceed with the contract.

Note: It does not apply for the Seller.

When you buy goods or services from a trader, you are entering into a contract.

Before you do, make sure you understand what you are agreeing to, remember …

A contract is an agreement made between two or more parties that is legally enforceable.

A contract arises when one party makes an offer and the other party communicates an intention to accept it. Contracts can be in writing or made verbally.

You could be entering a contract by:

• • Signing a document
  • Selecting a product in a shop and paying for it at the check-out counter
  • Clicking on an 'I agree' button on a web page.

It is also unlawful for traders to act force or coerce you into entering a contract.

For more information contact the ACCC.

Colling-off period rules

A 'cooling-off' period is a safeguard designed to give the Purchaser the opportunity to change their mind about a purchase or agreement that they have made within a specified timeframe.

You have a right to a “cooling-off period” when you purchase goods or services through door-to-door sales, telemarketing and of course Real Estate.

Most purchasers have the right to get out of the contract in certain circumstances this is called a "cooling-off period" (check the law in your State or Territory - the laws are not consistent and do not exist in each State or Territory).

Make sure you know whether you have this right at the time ANY type of contract is signed - and how you can assert this right if you need to.

The rules about “cooling-off periods” vary depending on the State or Territory law.

In general, they only apply when:

• There are a defined number of ‘clear business days’ after the contract is signed
• There is a private sale, not an auction
• It is domestic property, it does not apply to a commercial property or a farm

What are clear business days?

These days begin at midnight of the day you signed the Contract of Sale or Contract Note, it includes business days only, it does not include a Saturday, Sunday or public holiday.

It is important to note that it runs from the time you sign the contract NOT from when the seller signs.

In Real Estate the Purchaser (only) usually has five business days after the date of the Contract to carry out searches, pest & Building reports, title insurance, formal finance approval; the property is effectively removed from the market and no other purchaser can secure the property during these five business days.

If the Buyer finds problems with the property or finance - he can exit the contract prior to 5 pm on the fifth business day after signing the Contract.

Note: Not all Vendors agree to a “cooling off period”.

The Seller must return the deposit, less up to 0.25 per cent of the property’s purchase price.

Tips: It’s wise to ask the agent – “will the Vendor accept a cooling-off period when making the Offer?"
Keep in mind: A cooling-off period does not apply at Auction or where contracts exchange on the same day after the auction property is passed in.

About Garth Brown Garth Brown is the Founder and Director of Brown and Brown Conveyancers one of Sydney’s leading Conveyancing Firms. With 20 years experience as a practicing Conveyancer he has assisted hundreds of Clients to navigate through the maze of conveyancing issues when buying and selling property. Visit www.conveyancers.net.au/