Cooling Off Period: Entering a Contract When Purchasing Property
Are you buying a property? What is the "Cooling Off Period" ?
John Gallagher, solicitor from Argon Law provides the information you need when signing a residential contract.
The Cooling Off Period does not apply in every case:
- Doesn't apply upon the fall of a hammer at auction.
- A buyer can wave or shorten the cooling off period.
How long is the Cooling Off Period when purchasing a property? It begins when signing the contract and finishes five business days after at 5pm.
There is a termination fee when cancelling a contract within the Cooling Off Period often at 0.25% of the purchase price and a seller can sue the buyer for the balance.
You can still terminate a contract outside of the cooling off period due to finance or building and pest provisions.
When you enter into a contract to purchase residential property in Queensland, in most cases you will receive the benefit of a cooling off period, during which time you can terminate the contract without reason.
Such termination is not without penalty and, whether you are buying or selling, there are some other things worth knowing about the cooling off period.
Cooling off does not apply in every case. For example, it doesn’t apply to a contract entered into upon the fall of the hammer at auction. It is also possible for the buyer to waive or agree to shorten the cooling off, although this must be done in writing.
The cooling off period commences on the day that the buyer or its solicitor receives the fully signed contract from the seller or, if the buyer is the second party to sign the contract, it commences when the buyer tells the seller that it has signed.
The cooling off period finishes at 5pm on the fifth business day thereafter, although you should note that, if the period commences before 5pm on a business day, that counts as the first of the 5 days.
To terminate under the cooling off provisions, a signed notice must be given to the seller or its solicitor before 5pm on the fifth day.
If such a notice is given, then the seller is entitled to require the buyer to pay a termination fee of 0.25 per cent of the purchase price. This is usually deducted from the deposit before it is returned to the buyer.
A buyer who does not terminate during the cooling off period, is still able to rely on other conditions such as the finance or building and pest provisions, to terminate the contract, but only if the specific requirements of those provisions are satisfied.
If you have any doubts about how the cooling off provisions operate then ask your agent before you sign or give us a call.
If you require any further information please contact us on 07 5443 9988 or [email protected].
Argon Law is a Sunshine Coast law firm based in Maroochydore. We are commercial lawyers, body corporate lawyers and property lawyers and are eager to assist you in any way we can.
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