Buying a property is a big financial commitment. But what happens if you sign the contract, and a few days later have second thoughts? This is where the cooling off period comes in.
What is a cooling off period?
A cooling off period is a set period of time after you sign a contract to buy a property in which you can change your mind and withdraw from the purchase without facing the full financial consequences of breaking the agreement.
There are plenty of reasons you might change your mind about buying a property after signing the contract, such as:
- A building and pest inspection uncovers unexpected issues.
- Your finance isn’t approved by the lender.
- Your financial situation changes.
- Another property catches your eye.
- New information pops up, like a development that could block your dream view.
It’s okay to reassess, and cooling off periods exist to give you the breathing room you need to make the best decision for you.
Am I always entitled to a cooling off period? (This one is very important.)
No, not always! There are some situations where the cooling off period doesn’t apply, including:
- The property was purchased at a public auction or within three clear business days before or after a public auction.
- The property is used mainly for industrial or commercial purposes.
- The property is more than 20 hectares and used mainly for farming.
- You previously signed a contract for the same property with the same terms.
- The buyer is an estate agent or corporate body.
How long do I get to cool off?
The length of the cooling off period varies depending on the location of the property you’re purchasing. In Victoria (at the time of publishing this blog), the cooling off period is three business days beginning from the date you sign the contract (not when your offer is accepted). It’s also important to note that your cooling off period still begins even if your vendor hasn’t signed the contract.
If you’re purchasing a property in other states, keep these time periods in mind. However, always double check with local laws before you sign the dotted line because they may have changed since we published this blog!
- NSW: 5 business days
- QLD: 5 business days
- SA: 2 business days
- ACT: 5 business days
- NT: 4 business days
- TAS: No statutory cooling off period
We recommend marking the final date of your cooling off period on your calendar to ensure you don’t miss it!
Are there any costs involved with the cooling off period?
Unfortunately pulling out of a property purchase does also come with a small cost. In Victoria, the seller can keep 0.2% of the purchase price or $100 (whichever is greater) as a penalty for pulling out. This changes state to state, so please check the local laws of the property for up to date information.
How do I withdraw from the purchase during the cooling off period?
Backing out is a big decision in itself, so it’s important you’ve considered the following before taking the next step:
Understand the financial implications: While the cooling off period protects you from major financial loss, you may still forfeit part of your deposit. Weigh up whether this is a reasonable trade-off for avoiding a potentially poor investment.
Consider alternative solutions: If concerns have arisen about the property, consider whether they can be resolved. For instance, negotiating repairs or adjusting the price might be an option.
Talk to your conveyancer: Speak with your conveyancer before making any final decisions. They can clarify your rights and help you navigate the process.
Evaluate long-term suitability: Consider whether your concerns are short-term or if this property is genuinely not right for you and your future plans.
The next step is then to notify the seller in writing. Leaning on the expertise of your conveyancer is highly recommended for this as they can ensure the notice is properly drafted and delivered in time. And timing really is everything. If you miss the deadline, you could be legally bound to complete the purchase, so act quick if you have doubts.
Whether you need advice on withdrawing from a contract, understanding your obligations or simply want peace of mind throughout the entire buying process, we’re here to help. Get in touch today by calling (03) 5996 1600 or completing the enquiry form here.
