What is a cooling off period?
A cooling off period is a specific time frame where a purchaser can withdraw from a property contract of sale without any legal repercussions, even after they have signed it.
Cooling off periods are only available for property sales by private treaty, and can vary between states and territories. It’s important to note that a cooling off period does not apply for properties purchased at auction.
How long is the cooling off period?
Cooling off periods can range from 2 to 5 business days, depending on which state or territory you are from. Some states and territories don’t offer cooling off periods at all; if required, they must be requested.
Below are the standard cooling off periods offered across Australia:
NSW, QLD & ACT: 5 business days
NT: 4 business days (if you’re not represented by a conveyancer or solicitor)
VIC: 3 business days
SA: 2 business days
WA & TAS: no cooling-off period required, though this may still be added to contracts
Although these are the standards for cooling off period, a cooling off period has the potential to be extended, provided the buyer and the vendor both agree to it in writing.
Why would I withdraw from purchasing during the cooling off period?
There are several reasons why a purchaser may withdraw from the contract during the cooling off period. These may include:
The building and pest inspection you have organised uncovers issues that change your mind about wanting to buy.
Your finance may not have been approved by your lender. This is why you always subject your contract to finance approval.
Your financial situation changes.
You may prefer another property that has become available.
Any other reason that may deter you from wanting to purchase the property
What will it cost to withdraw during the cooling off period?
If you exercise your cooling off rights, the vendor may be entitled to keep a small percentage of the deposit you’ve already paid, although you should then be refunded the rest.
In NSW, for instance, if you withdraw from the sale during the cooling off period, you may need to pay the vendor 0.25% of the purchase price.
Can the cooling off period be waived?
If requested, the cooling off period can be waived. This signals that you have strong interest in the property, and may help you secure the purchase over any competing bidders. This is known as an unconditional contract of sale.
However, the cooling off period is there to protect buyers against last minute changes. If you request an unconditional contract of sale, you should be 100% sure this property is right for you.