If you have sold or purchased property before, you may be familiar with what is known as the “cooling off period”. The cooling off period is five business days following exchange of Contracts whereby a purchaser is permitted to withdraw from the Contract for any reason and rather than forfeiting 10% of the purchase price, the purchaser only forfeits 0.25% of the purchase price. For off the plan Contracts, the cooling off period is ten business days following exchange of Contracts.
The cooling off period only applies to Contracts for the sale of residential property. For the purposes of the cooling off period, residential property is defined as land with no more than two places of residence or vacant land which allows for the construction of a single residential premises. The area of the land must be no more than 2.5 hectares.
Despite a property being residential property, there are certain cases when there is no cooling off period. For instance, if the cooling off period is waived, if the property is sold by public auction or the Contract is exchanged on the same day as the public auction but passed in, or if the Contract is exchanged in consequence of the exercise of an option.
The cooling off period can be extended by a provision in the Contract or by the vendor in writing prior to the expiration of the period. The period may also be shortened by written or oral agreement by the parties, or it may be waived by the purchaser. For the purchaser to waive the cooling off period, the purchaser’s solicitor or conveyancer must provide what is known as a Section 66W Certificate.
In country areas such as Tamworth, it is normal for the vendor to request the cooling off period be waived as Contracts are rarely exchanged by the real estate agent. If you are purchasing in an area of high demand, you may need to exchange with the cooling off period to prevent the loss of the property to another purchaser whilst still allowing yourself the opportunity to consider the purchase further.
You should always seek legal advice before signing or entering into a Contract. For efficient and expert advice, contact Everingham Solomons where Helping You Is Our Business.
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