The cooling off period is a period of 5 Business Days after you receive a fully executed contract to purchase a property. During the cooling off period, the purchaser has the option to re-think the purchase and consider their ability to finance the property. If you change your mind within this timeframe, you can elect to terminate the contract at your absolute discretion. While a cooling off period has some obvious benefits, there are some things that purchasers need to be aware of.
Not all contracts contain cooling off periods.
There are types of contracts which are exempt from having a cooling off period. The most common and the ones to watch out for are a purchase by auction, a contract following the exercise of an option period and where you are buying 3 or more lots at the same time.
When does it start? WHEN DOES IT END?
A number of factors impact when your cooling off period starts, including weekends, public holidays and when you receive a copy of the contract which has been signed by both the Buyer and Seller. You must give notice terminating the Contract to the Seller or the Sellers solicitors by 5pm on the fifth business day of your cooling off period commencing. If you fail to do so your cooling off period will expire.
A phone call is not enough!
While the cooling off period does allow you to terminate the Contract at your absolute discretion without providing a reason for termination, there are still specific guidelines on how it must be done. It is not sufficient to give notice of termination over the telephone! It is important that you speak to your solicitor prior to the expiry of the cooling off period if you wish to terminate so that they can give the correct form of notice.
Does the seller get a cooling-off period?
No, a cooling-off period is only for the buyer, not the seller. Once a seller has signed the sale contract, they cannot back out of that sale.
Can buyers pull out of a property sale after the cooling-off period ends?
Once the cooling off period lapses, the buyer must go through with the purchase as detailed in the terms of the contract.
A business day is any day from Monday to Friday, not including public holidays. With respect to a property contract, a business day ends at 5pm.
Terminating during Cooling off is not getting out of a contract scot-free!
While the cooling off provides a means of terminating your purchase The Seller can elect to impose a 0.25% penalty if you chose to terminating during the Cooling off period. This penalty will be deducted from the deposit prior to the deposit being refunded.
Cooling off is a useful tool for the savvy purchaser. However, it’s use requires the aid of solicitors who can advise you on its use and impact.
If time permits it is always advisable to have your solicitors review your contract before signing it.
The team at ALF Lawyers are ready, to help you make the best decision for your purchase.
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