Buying real estate can be stressful and emotional. The pressure you feel when buying might cause you to make mistakes, which is why a cooling off period is standard in most property sales. It’s designed to protect the buyer.
First of all, what is a cooling off period?
A cooling off period is a set period of time after a contract is signed, during which a buyer can rescind their offer and withdraw from the contract without losing the entire amount of the deposit.
How long is the cooling off period?
In Queensland, the standard cooling off period is 5 days. This period begins on the day the buyer receives a signed copy of the sales contract. This period ends at 5pm on the fifth day, unless stated otherwise in the contract.
It’s important to note that if a contract arrives on a weekend or public holiday, the first day of the cooling off period will be the next business day. The cooling off period will still begin if a representative takes the copy of the contract on the buyer’s behalf.
However, there are a few exceptions to this rule. A cooling off period doesn’t apply if:
- The sale was by auction;
- The sale follows an unsuccessful auction. In this case, the buyer must have been a registered bidder in the auction and signed a sale contract by 5pm on the second business day after the auction;
- The sale is an option contract.
The cooling off period also doesn’t apply if the buyer is a publicly listed corporation, a statutory body, or if the buyer is purchasing 3 lots at the same time.
In the case of disputes, it’s up to the seller or the seller’s agent to prove when the contract was delivered.
Why might you need a cooling off period?
In general, nothing drastic will change during the 5 day cooling off period. However, there are situations where circumstances change and a buyer will pull out of a contract. This might be if a bank denies a loan application or if a building and pest report comes back showing there is something wrong with the property.
What happens if the buyer backs out?
If the buyer decides not to go ahead with the purchase, they must notify the vendor in writing that they are canceling the contract. In this scenario, the buyer pays a 0.25% penalty to the seller and the remainder of the deposit they paid is refunded.
Does the cooling off period have to be 5 days?
In short – no, it doesn’t.
You may specify a shorter or longer cooling off period in your contract. It is in the buyer’s interest to extend the cooling off period and it is in the seller’s interest to shorted the cooling off period. 5 days has been set as the standard in Queensland to ensure bargaining power imbalances don’t interfere with fair trade. However, you may negotiate these terms on a case by case basis with other parties to the contract.
If you’re unsure, talk to a real estate agent. A licensed agent will be able to tell you what you can and can’t do with regards to the cooling off period.
You can get in touch with Anthony Oddo on 0430 028 254 or [email protected] to ask any questions.
Sources: Queensland Fair Trading website