In those first few days when buying or selling a property, you hear a lot of reference to the cooling-off period. But what exactly is a cooling-off period?
What is the cooling off period and what are my rights?
A cooling off period gives the purchaser the option to secure the property whilst still enabling them to finalise pre-exchange inspections and obtain finance approval.
When a residential property is sold in New South Wales, as the purchaser, you are entitled to a five business day cooling off period from the exchange of Contracts. The cooling-off rights do not apply to the seller.
The purchaser may withdraw from the Contract prior to 5pm on the fifth business day. However, should you require an extension of the cooling-off period for reasons such as awaiting finance approval or awaiting Pest and Building Reports, your conveyancer may request this from the seller’s representative.
If the property which you are purchasing is zoned as rural, commercial or purchased at auction, the cooling-off period does not apply. Please refer to our ‘How to attend at an auction on your terms’ article for more information via these links:-
If you are purchasing an off the plan property the cooling-off period has just been extended from 5 business days to 10 business days as these contracts are often large and more complex.
What deposit is required to exchange Contracts?
Unless otherwise specified 10% of the purchase price is required as the deposit.
If you choose to exchange Contracts with a cooling off period you are required to pay 0.25% of the purchase price as a deposit on exchange. Prior to the expiration of the cooling off period you are required to pay the balance of the deposit being 9.75% of the purchase price.
Can you waive the cooling off period?
A purchaser can instruct their representative to submit a 66w Certificate to the seller’s representative which waives their rights to the cooling off period and in turn, the Contract becomes unconditional.
What are the consequences of exercising my cooling-off period rights?
Should the purchaser terminate the Contract during the cooling off period they forfeit the 0.25% deposit to the seller.