When purchasing a home, you need to pay a purchase price usually divided into the deposit and the remaining balance. The payment of the deposit amount is the sign of good faith on the buyers’ part evidencing the fact that they will comply with the requirements of the agreement. The deposit amount required can vary and is subject to mutual agreement between the buyer and the seller.

In certain situations you may change your mind and no longer proceed to purchase the home. In such an event, you may withdraw from purchasing once the contracts have been exchanged. A contract of sale often contains relevant section(s) concerning a ‘cooling-off period’. A cooling off period is the period during which you may withdraw from purchasing a property. Cooling off period varies between Australian states and territories, and you will need to check with your Solicitor.

How You Can Withdraw From Contract during A Cooling Off Period In New South Wales (NSW)

If you propose to purchase a property in NSW, your ‘cooling off period’ starts on the date of exchange of the contract and expires at 5.00 p.m. on the 5th business day after exchange. In order to withdraw from or cancel the contract of sale during the ‘cooling off period’, you need to follow certain guidelines. These are outlined below:

Required statement

A contract of sale of residential property must include a statement about the cooling off period. You can waive the cooling off period by giving a Section 66W Certificate of the Conveyancing Act 1919 signed by your Solicitor.

If the statement is not included in the Contract, you may withdraw at any time before the sale is finalised even though the cooling off period has expired and in such a case, you will be entitled to a refund of the whole of the deposit without any forfeiture.

Altering the period

The duration of the ‘cooling off period’ may be shortened or extended in accordance to the applicable rules in each case. The ‘cooling off period’ may be shortened either by a clause in the contract or a separate agreement entered into between the parties before, at or after the making of the contract.

Similarly, the ‘cooling off period’ may be extended either by a clause in the contract or by the seller giving the buyer an acknowledgement in writing at any time before the ‘cooling off period’ expires.

Withdrawing from the contract

To withdraw from a contract within the stipulated ‘cooling off period’, you need to give a written notice to the seller. Setting out the reasons for such withdrawal is necessary. The notice must be signed either by you or your solicitor, and must be served either upon the seller or the seller’s solicitor or any other agent mentioned in the contract. However, the notice should be served only during the ‘cooling off period’.

The service of the notice will be rendered ineffective if served after settlement of the sale has taken place. The notice, once duly served, cannot be revoked except with the consent of the seller.

In case you have signed the contract of sale and paid a deposit, you can withdraw during the ‘cooling off period’ subject to a forfeiture of normally 0.25% of your purchase price. The balance of the deposit will then be refunded to you.

You may also be liable to compensate the vendor for any loss incurred by the vendor over and above the forfeited amount. You will be entitled to rescind the contract and get back the entire deposit amount if the vendor’s title is found to be defective or if any statutory warranty made by the vendor is disproved or if the vendor failed to disclose any easement right existing on the property. No cooling off period applies if a property is bought at an auction sale or on the same day as the auction.

If you wish to withdraw from purchasing a property, but you are not sure how to proceed, feel free to contact our team of lawyers at Owen Hodge for our advice and guidance.

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