When buying a residential property in NSW, buyers are usually entitled to a 5 business day cooling off period after contracts are exchanged. During this time, the buyer can cancel the contract for any reason. If they do so, they must pay the seller 0.25% of the purchase price.
If you are considering cancelling a contract during the cooling off period, contact us immediately for legal advice.
The cooling off period begins on the day contracts are exchanged and ends at 5 pm on the 5th business day following exchange. For example, if contracts are exchanged on a Thursday, the period ends at 5 pm the next Thursday.
In some cases, the seller may agree to extend this period, but they are not required to do so.
Buyers can waive their cooling off rights by providing the seller with a Section 66W Certificate, which must be signed by a solicitor or licensed conveyancer.
Before issuing the certificate, the legal representative must explain the implications of waiving the cooling off period and confirm this advice in writing. Once the certificate is given, the buyer is bound to proceed with the purchase and cannot rescind the contract.
There is no cooling off period when a property is purchased at auction or if contracts are exchanged on the same day the property was passed in at auction. In these situations, the contract is unconditional, and the buyer cannot cancel without forfeiting the deposit and potentially being liable for damages
For off-the-plan property purchases, the cooling off period is extended to 10 business days. These contracts are generally more complex, so the extended period allows buyers more time to review the contract and carry out due diligence.
