Did you know that you can change your mind when it comes to a property purchase? In most states and territories in Australia, property buyers are allowed to rescind their purchase contract. This can be done by taking advantage of the “cooling-off period.”
To find out more how the cooling off period works, here are some things to take note of:
What is a cooling off period in real estate?
Buying a property is known to be an emotionally-charged process and you may accidentally overlook some details in the house you don’t like. It could be a lack of amenities, the small number of bedrooms, or maybe the neighbourhood. Mistakes happen. That’s where a cooling-off period has its advantages.
The cooling off period begins once you have received a written copy of the contract with your signature and the vendor’s signature. The cooling-off period typically lasts for five business days—Sundays and holidays are excluded. The amount of penalty you need to pay and how long you have to cancel your contract will depend on your location.
- NSW: If you bought your property in New South Wales, you have five business days to terminate the contract and will pay a penalty of 0.25% of the property purchase.
- QLD: Rules are similar to NSW, you have five business days, plus a 0.25% penalty.
- ACT: In the Australian Capital Territory, the same rule applies as in NSW and QLD.
- VIC: In Victoria, you only have three business days and will pay a penalty of 2% of the purchase price.
- SA: If your property is located in SA, you only have two business days to exit the contract, but you only need to pay a small deposit of $100.
- WA: In Western Australia, there’s no cooling-off period unless it is included in the contract.
- NT: You have four business days to back out in the Northern Territory with no penalty.
- TAS: A cooling-off period does not apply in Tasmania.
The cooling-off period starts once you exchange contracts and ends at 5PM on the last business day of the cooling-off period. If you bought a property at auction, a cooling-off period will not apply, unless you negotiate one with the seller.
Waiving your cooling-off period
In some states, you can elect to reduce or waive the cooling-off period in a contract. This means you cannot back out of your property purchase, making the contract legally binding. This can be a way of indicating to the seller that you are a serious purchaser. This must always be done in writing, and some states require forms to be completed by your conveyancer or solicitor, to ensure that you understand the ramification of waiving the cooling-off period.
Take note that only the buyer has the ability to waive his/her right, not the seller.
Buying a house has its procedures. Be sure to read the fine print carefully before you sign any contract and make sure you get legal advice from a solicitor or conveyancer.