Cooling-off period for residential property contracts (for buyers only)
A cooling-off period of 5 days applies to contracts for the sale of residential property. It will start the day the buyer receives a copy of the contract (signed by both parties).
- For contracts that arrive on a weekend or a public holiday, the cooling-off period starts on the next business day.
- The cooling-off period still begins if a representative takes it on the buyer’s behalf.
- If there’s a dispute, the seller (or their agent) must prove when they delivered the contract.
A contract is exempt from the cooling-off period for:
- a sale by auction
- a follow-up sale after an unsuccessful auction (before 5pm 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).
To cancel the sale contract, the buyer must give you (or your client) written notice by 5pm on the 5th day. They can deliver it in person, by email or fax.
If the buyer chooses to cancel during the cooling-off period, the seller:
- may deduct a penalty of up to 0.25% of the purchase price from the deposit
- will 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.
This document will need to state that:
- they waive the cooling-off period entirely
- the cooling-off period will last until 5pm on a particular day.
The buyer must pay the deposit at the time set out in the reference schedule of the contract. The seller’s agent is usually the deposit holder. If this is you, you must put the deposit in your trust account.
You must not access this money until:
- the seller is entitled to the money on settlement day
- the buyer is entitled to the money because they lawfully cancelled the sale contract.