If you are planning to buy a residential property or wish to enter into an agency agreement, you will generally come across a term called the ‘cooling off period’.

After a contract is signed, an amount of time is granted to every purchaser, during which the contract may be rescinded. This period is called the cooling off period and it varies from one State to another. Recently, the provisions in regard to the cooling off period have been amended in the different States. However, in New South Wales (NSW) the provisions regarding cooling off period have not been changed. In NSW, the cooling off period is guided by the Property, Stock and Business Agents Act 2002, Conveyancing Act 1919 and Conveyancing (Sale of Land) Regulation 2010.

Cooling Off Period

In NSW, the cooling off period is for 5 business days. This period starts soon after the exchange of the contracts between the parties and it expires at 5 pm on the 5th business day. During this period of time you have an option to rescind the contract. In case you intend to rescind, you will have to notify the other party in writing.

When Does a Cooling Off Period Apply?

The Conveyancing Act 1919 (NSW) explains the scope of Residential property under Section 66Q. A Residential property is:

The land where not more than two places of residence or any other improvements are situated;

Vacant land where construction of a single place of residence is not restricted under the law; and

Strata lot or lots comprising not more than one place of residence only.

Cooling off period is applicable to purchasers who enter into a contract for the sale of Residential property. In cases where a land is used completely for non-residential purposes, cooling off provision is not applicable.

Cessation of Cooling Off Period

The cooling off period does not apply in the following situations:

The cooling off period does not apply to a property that has been sold in an auction; and

The cooling off period will not apply where a property has been listed for sale through an auction and it remains unsold, but, on the same day the property was sold through a Contract of Sale, a land which is more than 2.5 hectares in area and is considered as a residential property, cooling off period does not apply to the sale and purchase of such land. Cooling off period will not apply in circumstances when the purchaser gives a Section 66W Certificate before or upon exchange of the contract of sale.

Section 66W Certificate

You as a buyer have an option to waive the cooling off period by providing a Certificate as per Section 66W of the Conveyancing Act 1919 to the seller. The Certificate should be signed either by your Solicitor or by a licensed Conveyancer.

Withdrawing from the Contract during the Cooling Off Period

The purchaser has a right to cancel a Contract of Sale during the cooling off period. If such withdrawal happens, the purchaser has to pay 0.25 per cent of the purchase price.

This Article is aimed to describe your rights and obligations with respect to cooling off period for a purchase of residential property in NSW. If you need any kind of assistance feel free to contact our team of experts Owen Hedge Lawyers.

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