fbpx

Cooling Off Period Explained

‘Cooling off’ is a term used to describe a period of time following a purchase when the purchaser may choose to cancel. In real estate, a ‘cooling off’ period is much the same, although there are rules and variables associated with it.

According to Section 31 of the Sale of Land Act, a purchaser who signs a contract or contract note for the purchase of real estate can terminate the contract within three clear business days from the day the purchaser signed it. This applies to residential private sales or small rural property sales.

The definition of three clear business days as interpreted by conveyancers is three full business days (not including the day of sale). A business day is any day other than a weekend or a public holiday. The three days also do not include the day in which the contract was signed. For instance, if you signed a contract on a Monday morning, then you would have until 5pm on Thursday to ‘cool off’.

If the buyer decides not to proceed with the purchase they must give written notice to the seller or the seller’s agent within the three day timeframe and in doing so, will be entitled to a full refund of money paid, less $100 or 0.2 per cent of the purchase price (whichever is greater).

The cooling-off period does not apply when:

  • 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
  • A contract was previously signed for the same property with the same terms
  • The buyer is an estate agent or corporate body

When it comes to commercial property, the purchase of such is not protected by cooling off rights, though the purchase of residential property by a corporate company or business is.

Sometimes there may be uncertainty as to whether the right to ‘cool off’ still applies. This may occur in instances such as:

The cooling off period of three clear business days has expired and the vendor has not accepted the purchaser’s offer then the vendor makes a counter offer in which the purchaser accepts.

In this scenario, the cooling off period will commence from the day the purchaser accepts (both verbally and in writing) the vendor’s counter offer. The right to cool off is not excluded, as the vendor did not accept the first offer from the purchaser. Where the vendor has not accepted the offer, there is no contract to found a right to ‘cool off’.

In conclusion, cooling off should never be relied upon as a safety measure. Cooling off is of no value to a purchaser – other than as a last resort. It should never be relied upon as an alternative to obtaining sound legal advice or doing thorough research.

Source: consumer.vic.gov.au and provey.com.au

Share:

More Posts

Tips For Finding The Best Real Estate Agents Melbourne

Selling or buying a home is one of the biggest transactions you’ll ever make. Your sale or purchase comes with significant legal and financial repercussions. As such, you need enough planning and understanding before finalising the transaction. One person who will be at the heart of this whole process is your real estate agent. (1) Finding the right real estate

Market Update May 2022

The month of May saw us witness a slight adjustment in property prices after a significant and prolonged period of growth, the third-fastest in Australia’s history.  Whilst those currently transacting in the market are seen to be operating with a little more caution, there are still a large number of buyers looking to purchase both homes to live in, and

family_friendly_suburbs

Which Are The Best, Family-Friendly Suburbs In Melbourne’s East?

Do you find yourself amid a lifestyle change? Perhaps a new baby is on the way, or the children are growing and need more space to call their own. For many of us, finding a bigger home to accommodate a growing family is something we’ll encounter during life’s journey and may involve deciding which suburb will suit our growing families

Top tips for selling in winter

When warm weather strikes and an abundance of flowers burst into bloom, it has traditionally been the time people choose to sell a home. Spring and summer see property listings surge, but sellers are cottoning on to the advantages of putting up that “For Sale” board in winter. With a slightly different approach, that coveted sold sticker could be up

Send Us A Message