What is a cooling off period?
Buying a home is not like buying a new pair of shoes, or even a new laptop. A new home is a purchase that you don’t want to come to regret in the future. Fortunately, most Australian states have a mandated cooling-off period. This is a period of time after exchange where a purchaser can change their mind and say “thanks, but no thanks, this isn’t the right purchase for me”. A typical cooling off period is 5-10 days from the date of the contract.
My clients often ask me if they will incur a cost by exercising their right to terminate during the cooling off period. In New South Wales, purchasers will usually only forfeit 0.25% of the purchase price if they choose not to continue with the purchase during the cooling off period.
In circumstances where it may not have already been completed, a cooling off period allows the purchaser to obtain any searches they may require such as pest and building reports. If you as a purchaser have not been able to obtain formal loan approval, the cooling off period is also the period of time that you can use to finalize loan approval and sign your loan documents.
It is important to be aware that a cooling off period is not always available. There is no cooling off period for properties that are purchased at an auction. If you are the highest bidder, you are usually bound to go through with the purchase, despite that some of the terms within the contract may not be in your favour. This is why it is important to review the contract with a Solicitor prior to bidding at an auction. Prior to the auction, your Solicitor will be able to identify any terms in the contract that might not be in your favour and negotiate with the vendor’s Solicitor to vary these terms.
If you have questions as a vendor or purchaser about the cooling off period, please don’t hesitate to contact our office on 1300 444 529 and one of our Solicitors will be able to assist you.