By: Martin Millard
Buying a property, especially your first can be a highly emotional experience placing you under a massive amount of pressure. Mistakes are sometimes made in the uncertainty of it all and for this reason, most Australian states and territories allow a cooling-off period after a sale is completed.
So, what exactly is the cooling-off period in buying real estate?
It is a fixed amount of days (5 business days in QLD) after you make a purchase in which you can back out of the agreement and will start the day the buyer receives a copy of the contract signed by both parties.
The cooling-off period will start on the first next business day for contracts received on a weekend or a public holiday.
The cooling-off period ends at 5 pm on the fifth and final business day after both parties signing and receiving the purchase contract. After this, the buyer must follow through on the contract and buy the property which remains subject to the terms of the contract.
The cooling-off period doesn’t apply to a few instances though and they include the following:
- a sale by auction
- a follow-up sale after an unsuccessful auction (before 5 pm on the second business day), in which the buyer was a registered bidder
- an option contract (or a sale contract formed as the result of an option contract).
The cooling-off period also doesn’t apply if the buyer is:
- a publicly listed corporation (or their subsidiary)
- the State or a statutory body
- buying at least 3 lots at the same time (whether or not in the same contract).
Cancelling the sale
In Queensland, a buyer needs to give the seller (or agent) written notice by 5 pm on the fifth business day. This cancellation letter can be delivered in person or by email.
The seller may then deduct the penalty of up to 0.25% of the purchase price from the deposit and will then need to refund the rest of the deposit within 14 days.
Waived or shortened period
The buyer can choose to waive or shorten the cooling-off period. They will need to put this in writing stating the terms.
Using your cooling-off period
Usually, buyers only make use of their cooling-off period when they suspect or have proof that something is not right or when they’ve forgotten to do something. This might be the case when a building or pest certificate reveals something undesirable about the property post signing of the papers. Another instance where buyers would cancel their contract is when they’ve overlooked getting pre-purchase loan approval and have their loan application turned down or delayed.
To avoid having to use your cooling-off period and possibly lose 0.25% of the purchase price – it is wise to be absolutely certain before finalising a purchase rather than after.
Do your research, ask your real estate agent or give us a call to explain anything and everything there is to know before putting pen to paper.