Real Estate Cooling Off Period NSW
Understanding the cooling off period when buying property in NSW.
Cooling-off period
When you buy a residential property in NSW, there is a 5 business-day cooling-off period after you exchange contracts. During this period, you may get out of the contract as long as you give a written notice. The cooling-off period starts as soon as you exchange and ends at 5 pm on the fifth business day after exchange.
A cooling-off period does not apply if you buy a property at auction or exchange contracts on the same day as the auction after it is passed in.
You can waive the cooling-off period by giving the vendor a ‘66W certificate’. This is a certificate that meets the requirements of section 66W of the Conveyancing Act 1919. The certificate needs to be signed by your solicitor or conveyancer. It is also possible to reduce or extend the cooling-off period by written agreement with the vendor.
If you use your cooling-off rights and withdraw from the contract during the 5 business-day period, you will have to pay the vendor 0.25% of the purchase price. This works out to be $250 for every $100,000.
Sometimes, there are more buyers looking for homes than there are properties on the market. This is called a sellers’ market. In this case, you may want to organise a quick contract exchange. This way you can reduce the possibility of someone beating your offer and get your building and pest inspections done during the cooling-off period. You will still be able to back out if there is a problem. However, it is important to have the contract checked by your solicitor or conveyancer before you sign it.
If your solicitor or conveyancer has examined certificates from the appropriate authorities, a pest and building inspection has been done and your finance has been approved, then deciding to waive the cooling-off period could make your offer more attractive to the vendor.
What are the other options to terminate a contract of sale?
If your cooling off period has expired, termination of the contract can only be in relation to terms and conditions of the contract, such as finance not being approved or the building inspection identifying major structural faults.
By signing a contract of sale, you are entering into a legally binding document. If you suddenly wish no longer to proceed, then legal advice is highly recommended.