So, you’ve just signed the paperwork for that dream home. Congratulations! But what if you have a change of heart? This might happen for several reasons. Perhaps you learn that your bank won’t cover your monthly mortgage payments for the agreed selling price. It’s not uncommon for buyers to be plagued by buyer’s remorse, wondering if they should have taken a closer look at that rising damp and leaky swimming pool before putting ink to paper.
Sometimes, unexpected personal circumstances such as an unforeseen illness or retrenchment can put the proverbial spoke in your homeownership wheel.
For buyers, a property cooling-off period might sound like a convenient way to ‘press the Control-Z button’ to reverse what they realise was an ill-considered decision. Still, it’s important to understand the terms and conditions of this conveyancing principle before going down this path.
And what if you’re the seller? Just as you thought it was safe to say farewell to show days and bin that ‘For Sale’ sign, your realtor calls with the bad news: your buyer is having second thoughts. What are your rights under such circumstances?
All too often, in their haste to clinch a property deal, buyers and sellers don’t think through – or are even aware of – all the impacts, dependencies, and legalities of cooling-off periods in property contracts.
So, let’s explore them in more detail.
What is a cooling-off period?
A cooling-off period may be understood as a five-day window during which a buyer has the option to cancel a property sale.
When does a cooling-off period begin and end?
In Queensland, a cooling-off period begins on the date that the buyer enters into a binding contract and receives all the relevant paperwork, which must be signed by both parties. Should a contract arrive on a weekend or holiday, the cooling-off period starts on the next business day. The cooling-off period comes to an end at 5 pm on the fifth day of the cooling-off period.
Can a cooling-off period be waived?
A buyer can opt to waive or shorten or the cooling-off period as long as they put it in writing.
See also: Importance of cooling-off period
3 Cooling-off period red flags to note
Cooling-off periods come with specific terms and conditions of which both buyers and sellers of property should be aware:
- Certain contracts are exempt from the cooling-off period
Cooling-off periods aren’t applicable in auction sales. In addition, they won’t apply to a private treaty contract that’s entered into within two business days of a property being unsuccessfully auctioned or when the buyer was a registered bidder at the auction. If you’re a buyer, you’re also not entitled to a cooling-off period if you’re a publicly listed corporation, a government department or other statutory entity or if you’re purchasing at least three properties at the same time.
- There’s no cooling-off period for sellers
If you’re the seller, you don’t benefit from cooling-off clauses under the law. So, be thoughtful before you put your property on the market, set your expectations for an asking price and agree to other contract terms and conditions.
- Cancelling a contract – even during the cooling-off period – comes at a cost for buyers
Unfortunately, as a buyer, you’ll be subject to a penalty if you cancel a sale during the cooling-off period – 0.25 percent of the contract price. The seller will then need to refund you the balance of your deposit within 14 days.
That said, you may be able to back out of a contract with no penalty if the home has serious structural defects, even if the seller is unaware of those issues.
Don’t let cooling-off periods make you lose your cool
Regardless of whether you’re a buyer or seller, if you find yourself having to navigate a cooling-off period scenario, try not to let it upset you. The most sensible course of action is to speak to your realtor.
They have a direct line of communication to qualified and experienced conveyancers who are familiar with Queensland’s property laws and can offer sound and practical advice, liaise with other parties on your behalf and help prepare all the necessary legal paperwork.
How can we help?
At OwnIt Conveyancing, we’ve been working with Queensland buyers and sellers alike for 30 years to assist them in navigating cooling-off period waters.
For this or any other conveyancing matters, feel free to contact one of our experts.