Are you looking to purchase or sell a property and unsure about what your rights are during the cooling off period? Below you will find 6 important things you need to know about the cooling off period. Always consult your solicitor or conveyancer prior to purchasing or selling to ensure your rights are protected.
1. How Many Days is the Cooling Period and What Are My Rights?
Under the law in NSW, a contract for the sale of residential land includes a 5 business day cooling off period. If you are purchasing in another state, we will inform you of the cooling off period length.
After exchange of contracts the seller is locked into the contract and the cooling off period applies to the buyer only. The cooling off period means that the purchaser may withdraw from the contract at any time prior to 5pm on the 5th business day. If agreed by the parties, the cooling off period can be extended or reduced in a written agreement.
The cooling off period does not apply if you purchase a property at auction. If you are interested in purchasing at auction, look out for our next blog about purchasing at auction.
2. Can the Cooling Off Period be Waived?
A purchaser can give up or waive their right to a cooling off period. To do this, a purchaser must ask their solicitor or conveyancer to provide a signed certificate which waives this right. This certificate states that the solicitor or licensed conveyancer has explained to the purchaser that providing the certificate means the cooling off period is waived and that the purchaser is bound by the contract and its terms at the time of exchange.
3. How Much Do I Need to Pay at Exchange?
A deposit of 0.25% is paid at exchange of the contracts with the balance of the 10% deposit payable before the cooling off period expires.
4. Will My Deposit be Forfeited If I Exercise My Right to Cool Off?
If the purchaser decides to exercise their right to cool off and terminate the contract, the 0.25% deposit will be forfeited to the seller. If the purchaser wants to terminate from the contract, they must notify their solicitor or licensed conveyancer and a form must be provided to the seller within the cooling off period.
5.Why is There a Cooling Off Period?
It is common on the Central Coast and in other areas for agents to conduct exchanges of contracts with a cooling off period. In this very hot market finding a suitable property is getting very hard and the benefit to the purchaser is that the property is secured and only the purchaser has the right to withdraw from the contract.
For example, if an unfavourable pest or building report is received, a loan approval does not issue or the purchaser just changes their mind, the purchaser is able to withdraw from the contract and buy another property if they wish. However, the penalty is that 0.25% part deposit held by the agent is paid to the vendor.
6.Does the Cooling Off Period Apply to Commercial Property or Rural Land?
Cooling off rights do not apply to rural land or commercial property. They only apply to residential land.
Contacting a solicitor or licensed conveyancer is important to ensure your rights and interests are protected when purchasing or selling. If you require assistance with purchasing or selling residential property, contact our professional Property Conveyancing Team.
