In regards to house sales, a cooling-off period is a time in which a buyer can withdraw from a property contract of sale without legal repercussions, even if they’ve already signed it.
The importance of having a cooling-off period can’t be overstated. This is the last opportunity that a property buyer can withdraw from the sale without major financial or legal consequences.
Where Are Cooling-Off Periods Available?
This period is available for property sales by private treaty but not for property bought at auctions. It’s also only available to buyers and not sellers in most cases. A cooling-off period is a mandatory part of the contract of sale in some states, but not in Western Australia or Tasmania. Ensure that you ask the appropriate parties if a cooling-off period is available for your property contract.
How Long Is a Cooling-Off Period?
The length of the cooling-off period will vary by state. When buying a house in NSW, for example, you’ll have a five-business-day cooling-off period after you exchange contracts. You’ll have the same amount of time if you’re purchasing property with the intention of building a house.
If you live elsewhere in Australia, you can expect a cooling-off period of anywhere between two and five business days. If agreed upon in writing by both the buyer and the seller, the cooling-off period can be extended. This can be beneficial if you need more time to finalise your finances.
How Do I Benefit from a Cooling-Off Period?
There are many reasons why you may consider withdrawing from a property contract in the days before it’s finalised. A common reason for withdrawal is that the buyer’s loan was not approved by the lender. Or perhaps the building inspection uncovered concerning information, such as pest control problems or structural issues. If something occurs that, in your eyes, decreases the house’s value, you’ll be glad that you have the ability to opt out.
What Does It Cost to Withdraw During the Cooling-Off Period?
The answer to this question also varies by state. In NSW, however, you may need to pay the seller 0.25% of the initial purchase price if you back out of the sale during the cooling-off period. You’ll then be refunded the rest.
How Do You Withdraw During the Cooling-Off Period?
To withdraw during the cooling-off period, you’ll typically need to contact the seller’s agent and present them with a written letter stating your intention to withdraw. This letter can be prepared on your behalf by your conveyancer or solicitor. This letter must be delivered via fax, email, mail, or in person before 5 p.m. on the last business day of the cooling-off period.
Know Your Options with an NSW Realtor
If you hire an NSW realtor to help you in purchasing property, they’ll be there to answer your questions, negotiate on your behalf, and go over property contracts with you. They can also arrange for house appraisals, inspections, and more, all to ensure you’re making a worthwhile purchase.
If you’re interested in having one of our talented realtors assist you, please reach out at your next convenience. We look forward to hearing from you.
