"Cooling off" period
Updated: Dec 5, 2023
What is a cooling off period?
A cooling off period is a period of time, following a purchase and after the signing of a contract, when the purchaser may choose to cancel the purchase.
How long is a cooling off period?
Under the contract the cooling off period allows you to end the contract within three (3) clear business days from the day you sign the contract.
It is important to note that the period begins from the date you sign the contract, not from the date the vendor signs the contract.
Why would a purchaser terminate the contract during the cooling off period?:
There may be reasons why the purchaser changes their mind after signing the contract, such as:
You may have arranged a building and pest inspection during the cooling-off period that uncovers issues that change your mind.
Your finance may not be approved by your lender.
NOTE: If you are obtaining a loan to purchase the property, you should make the offer to purchase ‘subject to finance approval’.
Your financial position may change.
You may find another property.
The property may not be suitable for development, such as covenant and/or easement affecting the property. It may be difficult to subdivide and/or construct.
What is the cost?
In the event a purchaser ends the contract within the cooling off period, the purchaser is entitled to a refund of all money paid except $100 or 0.2% of the purchase price (whichever is greater).
Notice
Under the section 31 of the Sale of Land Act, the purchaser must provide notice to the vendor if they wish to terminate the contract. The termination notice must be in writing and be provided to the vendor or their solicitor within the cooling off period.
When does the cooling off period not apply?
The cooling-off period does not apply if:
· The property was purchased at a public auction or within three clear business days before or after a public auction.
· The property is used mainly for industrial or commercial purposes.
· The property is more than 20 hectares and used mainly for farming.
· You previously signed a contract for the same property with the same terms.
· The purchaser is an estate agent or corporate body.
The information contained in this article is general in nature and does not take into account your personal situation. This information should not be relied upon in place of appropriate professional advice. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a solicitor.