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What is a cooling-off period”?
A cooling-off period is a period of time, usually 5 business days, that the purchaser has to
undertake their due diligence on the property.
When contracts are exchanged under a cooling-off period, the purchaser must pay a 0.25% deposit.
What does a cooling-off period do?
A cooling-off period benefits the purchaser in that the purchaser has time to reconsider its
purchase without being greatly penalised if deciding not to go ahead.
A purchaser may use the cooling-off period to further investigate the property before
deciding whether to go ahead or to secure finance. During the cooling-off period a
purchaser may obtain:
- a pest & building report;
- a strata report (if applicable); or
- unconditional loan approval.
How does a cooling-off period affect the vendor?
The vendor is bound to the contract during the cooling-off period and cannot market the
property or allow any further potential buyers through the property.
The purchaser will have an opportunity to rescind (end) the contract at any time during the
cooling-off period and must do so in writing to the vendor.
Does the purchaser lose anything by rescinding (ending) the contract during the cooling-off period?
Should the purchaser rescind during the cooling-off period, the purchaser will forfeit the
0.25% deposit to the vendor.
When does a cooling-off period not apply?
Under the law there is no cooling-off period in the following circumstances:
- Vacant land or developed land used for non-residential purposes (e.g. commercial);
- Property sold at auction.
This does not prevent the parties from separately agreeing to have a cooling-off period and
reflecting this by an express contract term.
Contact PDC Law today to discuss your conveyancing needs.
For more information, see the Conveyancing Act 1919 (NSW).
Shenae is a Licensed Conveyancer and Justice of the Peace. Shenae’s experience extends across a wide range of property transactions and she is renowned for her practical approach and efficiency.
