Residential Property, know your cooling-off rights.

Residential Cooling-off period

Residential Property, Know your cooling off rights.ย 

Contracts of sale are exchanged when the buyerโ€™s offer has been accepted by the seller and two identical contracts have been signed by both. However, a property is not considered sold until the buyer has paid the 10% deposit of the purchase price to the seller since the buyer is able to rescind the contract during the cooling-off period.

What is cooling-off period?

Pursuant to section 66S of the Conveyancing Act 1919 (NSW), every buyer of a residential property through private treaty sales is entitled to a 5 business day cooling-off period after contracts are exchanged. The cooling-off period is beneficial to the buyer for the following reasons:

  1. The buyer is only required to pay an amount equal to 0.25% of the purchase price to secure the property for 5 business days;
  2. The buyer has 5 business days to do due diligence such as reviewing pest, building or strata inspection reports to uncover any potential problems before paying the 10% deposit of the purchase price to the seller;
  3. The buyer has 5 business days to obtain unconditional loan approval and will be able to get out of the contract, forfeiting only 0.25% of the purchase price to the seller, if the bank does not issue the loan approval during that time.

Why does the seller insist on a section 66W certificate?

A seller can demand a buyer waive their cooling-off rights by insisting the buyerโ€™s solicitors to issue a section 66W certificate. This means the buyer is forced to pay the 10% deposit of the purchase price to the seller while has not yet received critical information about the property nor has received an unconditional loan approval from their bank.

Residential Cooling-off period

It is not recommended for a buyer to waiveย their cooling-off rights as that would provide the seller with the opportunity to gain an undeserved windfall if the buyer decides to rescind the contract.

Should you be looking to buy a residential property, our Property Team can ensure you fully understand your contractual rights and obligations prior to the expiration of the cooling-off period or cooling-off period being waived. We may also negotiate on your behalf for longer cooling-off period if extra time is required to finalise your loan approval or to complete all due diligence checks.

For more information please contact us or call 02 8764 1776


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