A cooling off period allows Buyers of residential property the opportunity to cancel a contract of sale if they change their mind about the purchase. Cooling off periods are strictly time limited, which means Buyers cannot take advantage of them after the cooling off period has expired.
Not all contracts will include a cooling off period, and the time limits, penalties and other rules vary from state to state.
Below is a summary of how cooling off periods work in different places in Australia, which is intended as a guide only. If you are unsure about how the cooling off period applies to you, please seek legal advice.
Cooling Off Period In Queensland
Most contracts for the sale of residential property in Queensland are subject to a cooling off period.
The cooling off period runs for five business days, starting on the day the buyer receives a copy of the contract, which has been signed by both parties to the sale.
A ‘business day’ is any day that is not a weekend or public holiday. For example, if the buyer receives a copy of the signed contract on a weekend, the cooling off period will start on the next business day.
The cooling off period ends at 5pm on the fifth business day. The Buyer must give notice to the Seller in writing prior to this deadline if they wish to cancel the contract.
Do All Contracts Have A Cooling Off Period In Queensland?
Not all contracts have a cooling off period. There are situations where the cooling off period will not apply. These include;
Where the property was sold at auction
Where the Buyer is a publicly listed corporation
Where the Buyer is purchasing three or more lots
Where the cooling off period has been waived by the Buyer.
Can I Waive The Cooling Off Period In Queensland?
It is possible for the Buyer to waive or shorten the cooling off period. This must be done in writing.
How Do I Cancel My Contract Of Sale In The Cooling Off Period In Queensland?
The Buyer must give the Seller written notice if they wish to cancel the contract during the cooling off period. The deadline for the cooling off period is 5pm on the fifth day after the cooling off period starts.
Is There A Penalty For Cooling Off In Queensland?
Yes. The Seller is entitled to retain 0.25% of the purchase price from the deposit. The Seller must refund the rest of the deposit within 14 days.
Cooling Off Period In The Northern Territory
In the Northern Territory, Buyers can only cool off where the Buyer’s conveyancer was not involved in the ‘exchange of signed counterpart copies’ of the Contract of Sale. This means that if the contracts are sent for signing by the agents and not the solicitors, the cooling off period will apply. The cooling off period will not apply where the property is purchased at auction.
How To Cool Off In The Northern Territory
If the cooling off period applies, the Buyer must give written notice to the Seller that they wish to rescind the contract. This must be done within four working days of;
If the Buyer’s conveyancer is not named in the contract – the date the contract comes into effect; or
If the Buyer’s conveyancer is named in the contract – the date the Seller or the Seller’s representative gives a signed copy of the contract to the Buyer’s conveyancer
Calculating The Cooling Off Period In The Northern Territory
To calculate the cooling off period, count four working days from the date the cooling off period was triggered (either the date that either the contract comes into effect or the Buyer’s conveyancer is given a copy of the Contract depending on your circumstances) without counting that day.
A ‘working day’ is any day that is not a Saturday or Sunday, or a public holiday in the Northern Territory.
For example, if the Buyer’s conveyancer is not named in the contract and the contract comes into effect on a Friday, the cooling off period will run until 5:00pm on the following Thursday.
Is There A Penalty For Cooling Off In The Northern Territory?
If a Buyer cools off in the Northern Territory the contract is rescinded, which means it is treated at law as though it never existed. With some limited exceptions, any deposit paid must be refunded to the Buyer.
Cooling Off Period In Victoria
The cooling off period in Victoria allows the Buyer of residential property to terminate a contract of sale within three clear business days from the day the contract is signed by the Buyer.
Although it runs contrary to the principles of contract law, the cooling off period has been inserted by legislation to accommodate a modern consumer protection rationale.
If you are purchasing property in Victoria, it is critical that you understand how cooling off periods work, and what your rights are.
How To Calculate The Cooling Off Period in Victoria
The cooling off period starts on the first business day after the Purchaser signs the contract of sale, and ends at the end of the third clear business day.
A clear business day means one entire business day (a day that is not a weekend or public holiday).
For example, if a Buyer signs a contract of sale on a Saturday, the cooling off period will start on Monday and run until the end of Wednesday.
The day the Buyer signs is not counted even if it is a business day, so if they sign on a Monday, the cooling off period will commence on Tuesday and run until the end of Thursday.
Exceptions To The Cooling Off Period in Victoria
The inclusion of a cooling off period is a legislative requirement in Victoria, and it cannot be excluded by contract. However, the cooling off period will not apply to all property sales, including where;
The property was purchased at a publicly advertised auction or within three clear business days before or after a publicly advertised auction
The Buyer has previously been under contract for the same property with the same Vendor under substantially the same terms and under similar circumstances
The Buyer is purchasing the property as a corporate body or estate agent
The property is used primarily for farming and is larger than 20 hectares
The property is used primarily for industrial or commercial purposes
How To Cool Off in Victoria
In order for a Buyer to cool off and have the contract terminated, they must notify the Vendor by giving written notice before the expiration of the cooling off period. Notice must be given in accordance with s 31 of the Sale of Land Act 1962 (Vic), which means;
The written notice must be signed
The written notice must be given to either the Vendor, the Vendor’s real estate agent, or the Vendor’s solicitor.
Is There A Penalty For Cooling Off In Victoria?
Yes. The initial deposit paid by the Buyer will be refunded, after the cooling off penalty is deducted. This penalty is $100 or 0.2 percent of the purchase price, whichever is greater. The nature of current property prices in Victoria means that the penalty will almost always be 0.2% of the purchase price.
The rationale for the penalty is that a property Buyer who exercises their rights under the cooling off period is causing inconvenience to the Vendor, and to prevent Buyers cooling off frivolously.
Timing Can Prejudice Buyers in Victoria
The cooling off period in Victoria runs from when the Purchaser signs the contract, regardless of whether the Vendor has signed. This means the cooling off period will run regardless of whether there is a binding contract of sale.
This can lead to a situation where the cooling off period runs, and expires, prior to the Vendor accepting the offer and signing the contract. However, the Buyer can still withdraw the offer until the contract is signed by the Vendor and this has been communicated to the Buyer.
A delay in the Seller’s agent sending the contract to the Buyer’s lawyer can also mean that the cooling off period has expired by the time the contract is received and before the Buyer can be properly advised on their right to cool off.
Can I Terminate The Contract After The Cooling Off Period Has Expired?
Contracts of sale are usually subject to one or more conditions that will allow a Buyer to cancel if the condition is not satisfied. For example, the contract might be subject to a satisfactory building or pest inspection or to the Buyers obtaining finance. There may also be other circumstances in which a contract can be cancelled or rescinded.
The Buyer’s ability to cancel the contract depends on the terms of the contract and their individual situation. If you are in doubt, seek legal advice.
If you are buying property, it is critical that you understand your cooling off rights under your contract of sale, and if you are unsure, you should seek legal advice.
Our qualified team of property lawyers and licensed conveyancers are waiting to take your call and answer any questions you have about the conveyancing process. Contact us today, or head over to our quote page for an obligation free quote.
The above is not legal advice and is general information only.
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