Cooling off periods

02 November 2018

Buying a home can be emotional and stressful. Sometimes buyers make the wrong decision in the heat of the moment or their circumstances change after signing a contract to purchase a home. If a buyer changes their mind and wants to cancel a contract for a residential property, they may be able to do so if a cooling off period applies to their contract and they give notice to the seller before the cooling off period expires.

But what exactly is a cooling off period?

A cooling off period is only for the buyer’s benefit and a seller cannot cool off. It gives the buyer time to think things over without feeling rushed into a decision. A little piece of mind. It’s not everyday you buy a house of course. The laws that apply to cooling off periods differ between states and territories.

Generally, a cooling off period does not apply to auction sales or if the cooling off period has been waived by the buyer. Buyers should not waive their cooling off period without first seeking legal advice (which is a requirement in some states).

Australian Capital Territory

  • Cooling off period expiry date: 5pm on the 5th business day after the contract date (the counting of days does not include the contract date).
  • Cooling off termination fee: 0.25% of the purchase price.
  • Other circumstances where cooling off period does not apply to residential contracts: Does not apply to contracts entered into on the same day as the auction; corporate buyers.

New South Wales

  • Cooling off period expiry date: 5pm on the 5th business day after the contract date (the counting of days does not include the contract date).
  • Cooling off termination fee: 0.25% of the purchase price.
  • Other circumstances where cooling off period does not apply to residential contracts: Does not apply to contracts entered into on the same day as the auction.

Northern Territory

  • Cooling off period expiry date: 5pm four business days (the counting of days does not include the date that the contract is received) after:
    • (where there is no conveyancer named in contract) - the date the contract comes into force;
    • (where there is a conveyancer named in contract) - the day the Buyer's conveyancer receives a fully executed copy of the seller's signed contract.
  • Cooling off termination fee: Nil.
  • Other circumstances where cooling off period does not apply to residential contracts: Does not apply if the contracts are exchanged between the solicitors or conveyancers.

Queensland

  • Cooling off period expiry date: 5pm on the 5th business day after the buyer receives the executed contract (the counting of days includes the date that the contract is received if received before 5pm that day).
  • Cooling off termination fee: 0.25% of the purchase price.
  • Other circumstances where cooling off period does not apply to residential contracts: Does not apply to contracts entered into by a registered bidder within 2 clear business days of an auction; publicly listed corporate buyers.

South Australia

  • Cooling off period expiry date: 2 clear business days after the contract date or receipt of the Form 1 Vendor Statement, whichever is the later.
  • Cooling off termination fee: Initial deposit up to $100.
  • Other circumstances where cooling off period does not apply to residential contracts: Does not apply to contracts entered into on the same day as the auction; sales by tender; corporate buyers.

Tasmania

There is no statutory cooling off period in Tasmania however there is an optional cooling off period in the standard contract.

  • Cooling off period expiry date in contract: 3rd business day after the contract date (the counting of days does not include the date that the contract was signed).
  • Cooling off termination fee: Nil.
  • Other circumstances where cooling off period does not apply to residential contracts: Does not apply if the cooling off provisions have been waived in the contract.

Victoria

  • Cooling off period expiry date: 5pm on third business day after the buyer signs the contract (the counting of days does not include the date that the contract was signed).
  • Cooling off termination fee: The greater of $100 or 0.2% of the purchase price.
  • Other circumstances where cooling off period does not apply to residential contracts: Does not apply to contracts entered into 3 days either side of an auction.

Western Australia
There is no cooling off period in Western Australia.

Are there any other ways a buyer may be able to cancel a contract?
If the contract is subject to a condition for the buyer’s benefit, then the buyer may be able to cancel the contract, e.g. if they cannot obtain finance approval or are not satisfied with their building and pest inspection.

Also, if the contract doesn’t comply with disclosure laws then the buyer may have a right to cancel the contract.

Buyers should always seek legal advice about their rights and obligations from experienced property lawyers like lawlab before making decisions to sign or cancel a contract.

Disclaimer This information is general in nature only and does not constitute legal advice. Lawlab accepts no liability for the content of this information. You should obtain legal advice specific to your individual circumstances. Lawlab’s liability is limited by a scheme approved under Professional Standards Legislation. Legal practitioners employed by lawlab are members of this scheme.
Richie Muir
Richie Muir
Legal Director

Richie is an experienced and commercially astute lawyer specialising in property law. He leads lawlab’s team of legal advisors and is the go-to problem solver for complex or unusual matters.  Having spent many years living and studying in Europe he now calls Brisbane home. Outside of work he juggles his time helping bring up his 2 young daughters, playing football and developing property.

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Lawlab works with thousands of property buyers and sellers every year and uses this experience to make the conveyancing process easier for you.

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