When purchasing a residential property, the buyer generally has a 5 business day cooling off period after exchanging the contracts. During the cooling off period, the buyer can rescind (cancel) the contract and purchase of the property and will only have to pay the seller 0.25% of the purchase price.
If you are considering cancelling your contract during the cooling off period, you should contact us immediately to get advice.
The cooling off period starts when the contracts are exchanged and continues up to 5 pm on the 5th business day after the day of exchange. For example, if a contract is exchanged on a Thursday, the cooling off period will end at 5 pm on the following Thursday. In some cases, the seller may agree to extend the cooling off period, but there is no obligation to extend this period.
If the property is purchased off the plan, the cooling off period is a more extended 10 business day period. Off the plan contracts are usually more complex and longer, which means the buyer is given a longer period if they have exchanged to have the contract reviewed and complete their due diligence.
There is no cooling off period if the property is purchased at an auction or the contracts are exchanged on the same day as the auction after the property has been passed in. In these circumstances, the contract is unconditional, and the purchaser cannot rescind the contract without losing their deposit and being liable to the seller for any damages.
A buyer can waive their cooling-off rights by giving the seller what is known as a “Section 66W certificate”. The certificate is issued by a lawyer or conveyancer and means that the buyer cannot rescind the contract with exchange and must proceed with the purchase. The Section 66W certificate requires that the lawyer or conveyancer explains the consequence of providing the certificate to the buyer and then signs the certificate to confirm that they have provided that advice.