When buying a property, there's a critical stage after you sign the contract called the 'cooling off period'. This is where you can cancel the sale for any reason you like – despite the fact you've signed a legally binding contract to purchase the property.
If you decide to walk away from the property within the cooling off period, cancelling the contract may incur a financial penalty, generally equivalent to 0.20% to 0.25% of the final sale price of the property.
Cooling off periods only apply to a private settlement (or private treaty) when buying a house.
They do not apply when you're buying a property through an auction. However, if the seller and buyer personally negotiate the contract after the auction, a cooling off period may apply.
The rules regarding cooling off periods can vary between states and territories, with WA and Tasmania having no cooling off period whatsoever.
You can get an idea of the differences between states below:
State | Cooling off period | Percentage of sale price you forfeit | |
|---|---|---|---|
| ACT | 5 business days | 0.25% | $1,250 |
| NT | 4 business days | 0 | Nil |
| NSW | 5 business days | 0.25% | $1,250 |
Queensland | 5 business days | 0.25% | $1,250 |
SA | 2 business days | Small holding deposit is forfeited (up to $100) | $100 |
Victoria | 3 business days | $100 or 0.20% (whichever is greater) | $1000 |
WA | Nothing mandated by law, but you can add a clause in your contract | 100% | $500,000 |
Tasmania | Nothing mandated by law, but you can add a clause in your contract | 100% | $500,000 |
The cooling off period when buying a house can go up to five business days. It starts on the day you received a copy of the signed contract and ends at 5PM on the last day of the period.
It is advisable to ask for a notice of receipt when the contract is delivered as a proof when the cooling off period started.
During this period that your solicitor or conveyancer should make enquiries to detect any problems with the property. These enquiries may include a building and survey report, or the certificate of compliance secured from the local office. If there are any problems, you can use the cooling off period to terminate or cancel the agreement.
When you wish to rescind the agreement, you have to write a letter or notice of termination to the agent. You do not need to give any explanation as to why you are cancelling the contract. This letter should be rendered within the cooling off period and not after since you will be bound by the contract after that.
There are 3 ways you can render the letter of termination – given personally to the agent, mailed or delivered to the agent’s business address, or delivered to a place assigned in the agreement should a cancellation take place.
As the seller, once the contract is terminated within the cooling off period, you must give back the deposit within 14 days after the cancellation, with the penalty already deducted.
If you are selling your house and have had your sale cancelled within the cooling off period, find out you can put your home back on the market.
As the buyer, you can choose to waive or shorten the cooling-off period. You will need to put this in writing and clearly state:
Waiving the cooling off period might make your offer more attractive to the seller; however, you should exercise caution before waiving it. Be sure that your conveyancer has already made all the necessary inspections like pest and building inspections. You should also make sure that your finances are ok, which means your loans have been approved.
"Don't ever be pressured into waiving the cooling off period by the agent or the seller. This can happen when there are known but undisclosed problems with the house. You might think it's OK to waive the cooling off period at the time, but you'll probably come to regret it. Pressure to waive the cooling off period is almost never a good sign."
John is the co-host of the this is money and this is property podcasts (formerly my millennial money and my millennial property). He is Director at SOLVERE Wealth, Director/Buyers Agent at Envisage Property, and is property coach of over 25 years.
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Hi I am in NSW, I have paid 0.25% of the offer price to selling real estate agent’s Bank Account on 11/04/2016 but on 12/4/16 Seller (owner) rejected my offer and agent informed me by phone and asked my bank details to refund my 0.25% of the property price.
The entire communication was over the phone.
because agent informed me over phone I thought it would be best idea to send an email describing relevant details and reason that seller rejected my offer also, requested that refund the money I have paid to my bank account.
But agent did not respond to my email or SMS. Agent did not gave me any paper/copy of contract documents that I signed while paying 0.25%, Now I am concerned whether I will be able to get my money back or what are the option available to me?
Hi Rakesh,
Thanks for the question!
I would recommend contacting the Real Estate Institute of NSW to explore what options are available to you. Otherwise, you might want to contact NSW Fair Trading if the information or resolution isn’t to your satisfaction.
I hope this helps,
Marc.
Hi
I just signed up the letter contract renting yesterday. And today, which is the next week, my friend and I just negotiated the rent apartment to reduce and the agaent still hold it since I have not receive an acceptanc. Is it cooling-off period? And, I am considering to cancel the contract, should I pay 0.2% from the renting price?
Hi Mel,
Thanks for getting in touch.
Please note that the rules surrounding cooling off periods differ depending on the state in which the property is located. However, above you’ll see the duration of the cooling-off period and the amount you may forfeit if you decide to exercise your cooling off right for each state and territory.
If you decide to rescind the contract within 3 business days since the day you received a copy of the signed contract, and the property is located in Victoria, then you will forfeit 0.2% of the rental price of the property.
Ensure that you provide a letter or notice of termination to the agent with an explanation for why you are cancelling the contract.
Please speak with the agent directly, or a solicitor, to understand your options in this situation.
Thanks,
Belinda
We signed up to sale our house at auction yesterday but the block we wanted has just been sold so can we cancel our real estate contract and not go to auction -is there a cooling off period in queenslnd australia
Hi Hever,
I’ve sent you an email to follow up with this enquiry.
Thanks,
Belinda
I am buying a property. The cooling off period ends at 5.00pm on Monday the 15th July. The lawyer says the searches will be done only after the cooling off period ends .Is this correct ? I am really worried as the lawyer has not started any searches and he is waiting for the cooling off period to end. Your reply will be very much appreciated.
Hi Swarna,
Thanks for your enquiry.
I suggest that you revise the “cooling-off period” clause in your contract to find out when the searches will take place. However, if you’re lawyer has advised you that they will take place after the cooling-off period ends, then I would suggest this is correct.
Please refer to our guide on the cooling-off period when buying a house and you can fill out a form to speak with a conveyancing specialist should you need further clarification.
Kind regards,
Belinda
I have put 0.25% deposit for the property which is advertised as additional rental income from the granny flat by seller agent. During cooling off period, I found that granny flat does not have council approval and hence the flat can not be legally rented.
In such case, can I get refund of 0.25% if I withdraw in the cooling off period?
If I have to go ahead with the purchase, can I take legal action against the real estate agent?
I highly appreciate for your suggestions in this regard.
Thanks.
Hi Sanjaya,
Thanks for your enquiry.
finder.com.au is an online comparison service so we can’t provide you with financial or legal advice regarding this situation.
Depending on which state you live in, the cooling off period is generally 2-5 business days. Generally, cancellation of the contract will incur a penalty of 0.25% of the sale price of the property.
I would strongly suggest that you revise the “cooling off period” clause in your contract and speak with your agent directly. It may also be necessary for you to seek legal counsel.
Thanks,
Belinda