Contracts for the sale of residential properties in Queensland and New South Wales are subject to a cooling off period during which period a buyer may terminate the Contract.
The cooling off period is a 5 business day period commencing (in Queensland) on the date that the buyer or the buyer’s solicitor/conveyancer received the Contract and ending at 5.00 p.m. on the 5th business day from that date. Even if a Contract is received at 4.30pm on a specific day, that day is counted as the first day. In NSW the cooling off period starts on the date the contracts are exchanged.
The buyer may terminate the Contract during this period by giving written notice to the seller’s solicitor of termination of the Contract pursuant to the cooling off rights in the Contract. The buyer will be liable for .25% of the purchase price which amount may be deducted from the deposit, if any deposit was paid, and the balance of the deposit will be refunded to the buyer. If the .25% is more than the deposit paid by the buyer, the seller may commence legal action against the buyer for the recovery of the .25% of the purchase price as a liquidated debt.
It is also possible for the buyer to waive its cooling off rights by providing a Certificate to the seller stating that the buyer is aware of its right under the cooling off period, the effect of the cooling off period was explained to the buyer and that the buyer chooses to waive its rights to terminate the Contract.
In New South Wales the notice is by way of a Section 66W Certificate and in Queensland a similar Certificate by the buyer’s solicitor or agent may be provided.
If the buyer does not terminate the contract in the cooling-off period, the contract becomes unconditional except if there are other provisions like finance or pest and building that makes the contract conditional. The problem is usually where the contract is not subject to anything else. The cooling off period is then the only right a buyer has to terminate a contract and if the deadline is missed, the buyer must complete the contract.
It must be noted that if a property is bought at an auction the cooling off period does not apply as the Contract is an unconditional Contract on the fall of the hammer.
It is of the utmost importance particularly in Queensland, for agents to explain the cooling off period to a buyer. We find that buyers are not always aware of when a cooling off period starts and then approach us with a request to terminate the Contract after the cooling off period has expired. We often hear the allegation that the agent did not explain the cooling off period to the buyer.
Should you require any assistance in this matter please do not hesitate to contact our Property & Commercial Department Manager, Jess Kimpton, on 07 5506 8245 or email jkimpton@attwoodmarshall.com.au or free call our 24/7 phone line on 1800 621 071.
