The cooling-off period in Australia is one of the most important events in the transfer of ownership. It’s the purchaser’s opportunity to back out of the deal if they wish to without having to give a reason. That’s why it is quite critical to understand all of the complexities of this period in real estate.
What is a cooling-off period?
Once a purchaser has signed a contract for the acquisition of residential property, you are legally entitled to a cooling-off period, which is 5 working days from the day you receive a contract signed by both parties. Day 1 is the day you receive the contract. During this period, you may change your mind and withdraw from the agreement. Alternatively, you may use this to finalize your financial dealings or to respond to any due diligence inquiries, such as a pest or building inspection.
When entering a cooling-off period contract, keep the following things in mind:
- Even if you receive the contract on a public holiday or a weekend, the cooling-off period will only commence on the next working day.
- A seller or an agent is required to prove when a contract was delivered in the event of a dispute.
- The cooling-off period in Queensland ends at exactly 5 pm on the last day of the cooling-off period.
Can the Cooling-Off Period Be Shortened or waived?
Yes, this is entirely up to the buyer, who has the option of shortening or waiving the cooling-off period. But this must be clearly documented, and the documentation must state clearly which precise day has been designated as the last day and that the period will finish at 5 p.m.
What Are the Specifics of the Cooling-Off Period For Buyers and Sellers?
The cooling-off period means that if the purchaser chooses to withdraw from the contract for any reason (such as a failed loan request, a pest, or a building report), they will be required to compensate the seller as much as .25% based on the property’s purchase price.
What are the exceptions for the cooling-off period?
The Cooling-Off Period will not apply in a number of circumstances including but not limited to when a property is sold at auction.
How to Terminate the Contract During the Cooling-Off Period?
If the buyer wishes to terminate the contract, he or she must tell the seller in advance by 5 p.m. on the fifth day of the cooling-off period. This notice must be in writing. If the buyer cancels the contract within the cooling-off period, the seller may be entitled to a 0.25 percent penalty on the deposit amount owed to the seller. The remainder of the purchase price must be returned to the buyer within 14 days.
Is There a Cooling-Off Period for Commercial Real Estate?
No, there is no cooling-off period for commercial contracts. The presence of a lease agreement on commercial real estate is common since it usually provides the property with the value that it has attained. In such cases, it is recommended that the leases be reviewed by a solicitor because the lease might have a negative effect on the value of the property by imposing unreasonably severe or uncommon requirements on the owner.
Can the seller terminate the Contract of Sale?
In certain circumstances –Yes. The seller has fewer options for terminating the sales contract than a buyer. The most typical cause for a seller to terminate a contract is that the buyer has failed to pay the entire deposit amount required.
How Long Does a Property Transfer Usually Take?
The duration of a property transfer/ conveyance depends on the contract but in Queensland, it is typically 30 days for residential contracts. On the other hand, commercial contracts often have a much longer settlement duration because of the degree of inquiries that are carried out, despite the fact that such contracts don’t have a cooling-off period. For example, purchasers may want more time to get financing and complete their due diligence, and settlement is likely to take longer than 30 days because of that.
The five-day cooling-off period is not the only step in the transfer of ownership, here you can learn more about all the steps of the property transfer process here.
If after reading this article you have any additional questions, you can call us at 1300 185 636 (it’s free) or email us. If you would like to know the total of all transfer fees for your property transfer, you can enter your property details on this form and you will receive an email with the exact details of your hypothetical transaction.