If you are buying a residential property, then you must understand the cooling off period – something that is usually included as a standard in the contract of sale.
In essence, this is a clause that allows you to rescind on the contract to an extent and not lose your deposit. You may, however, be required to foot 0.25% of the purchase price as a result (often taken from your deposit). You must provide the written notice before 5pm of the date the cooling off period ends.
To invoke your right to exercise this part of the contract, you must provide written confirmation that you are rescinding based on the cooling off period.
The cooling off period is the time in which you can rescind under this clause. Usually, all purchasers are protected by this rule, and off the plan purchasers may be protected. It is worth double checking the contract through with your solicitor prior to signing.
The cooling off period is normally about five business days, however this can be extended or shortened when the contract is being written up. It can be altered later, by an addition to the contract, if done in writing. In each state and territory the rules are different, so you must seek advice prior to this stage. For instance, Tasmania requires a two day cooling off period minimum, according to the Real Estate Institute of Tasmania.
In Queensland, the form that must be filled out by the solicitor or lawyer in order to alter the cooling off period.
WHEN ISN’T THERE A COOLING OFF PERIOD?
Properties sold at a public auction do not have a cooling off period attached – therefore rescinding on a contract will see you losing your deposit.
Properties transacted close to an auction date may also not come with cooling off rights. In Victoria, this is three days either side of an auction, in Tasmania it is two.
Similarly, you can waive your right to a cooling off period via a 66W certificate that can be written up by a solicitor on your behalf. You may wish to do this to help convince a seller into giving you preference – however, it does mean that there is little turning back. The cooling off period is a safety guard that you should think carefully about losing – particularly if what you are buying is done so hastily or with high pressure sales tactics.
“Personally we think you are unwise to use cooling-off as a strategy in negotiation. We as an organisation do not use it as a negotiating strategy. Our strong recommendation is that you do all your due diligence prior to signing,” he explains.
Cooling off periods are not limited to property, and are often also discussed in relation to other purchases and contractual agreements. For instance, the ACCC reminds you that if you buy something through telemarketing or door-to-door sales, a cooling off period applies.