The complete guide to cooling-off periods when selling a property

What you should know before accepting an offer on your property.

What-is-a-cooling-off-period2

A cooling-off period refers to the number of business days during which a property buyer can walk away from a legal agreement to purchase a residential property. Buyers who do this usually have to pay the seller a small termination fee, of around 0.25% of the purchase price of the property. Any deposit above this amount is usually refunded.

If you are selling a house, you aren't entitled to a cooling-off period. Once a vendor signs the sales contract they’re obliged to go through with the sale, subject to the conditions of the contract.

This guide explains exactly where you stand if you buy a residential property and then break the sale contract during the cooling-off period.

Do all buyers in Australia get a cooling-off period?

Other than Tasmania and Western Australia, all states and territories have a standard cooling-off period for properties that are not sold at auction.

  • Is there always a cooling off period?

There are two major exceptions to mandatory cooling-off periods:

    1. Properties sold at auction have no cooling-off period
    2. In some states, for normal house sales the buyer can sign an agreement that waives their right to a cooling-off period.

Australia-wide cooling-off rules

    • What happens if a buyer breaks their sale contract during the cooling-off period?

      Buyer payment to seller if sale is cooled-off

StateCooling-off periodSale price paid to cool offWhat you would gain on a $400K cooled-off sale
ACT5 business days0.25%$1,000
NSW5 business days0.25%$1,000
NT4 business days if purchaser isn't represented by a conveyancer or solicitorNilNil
QLD5 business days0.25%$1,000
SA2 business daysSmall holding deposit is forfeited (up to $100)$100
TASNone100%$400,000 (sale must proceed)
VIC3 business days. Cooling-off period doesn’t apply if 3 days before or after a public auction. Industrial/commercial and farms can be exempt.0.2%0.2%
WANone100%$400,000 (sale must proceed)

cooling off period

  • Do sellers get a cooling-off period on sales?

    No, a cooling-off period is only for the buyer, not the seller. Once a seller has signed the sale contract, they cannot back out of that sale.

  • Can buyers pull out of a property sale after the cooling-off period ends?
    No, buyers must go through with the purchase as detailed in the terms of the contract, after the cooling-off period has finished.
  • What is considered a business day?
    A business day is any day from Monday to Friday, not including public holidays. A business day ends at 5pm in the world of home sale contracts. If you hand in your signed notice to use your cooling-off rights after 5pm on the last day of the cooling-off period, it will be too late.

Agency cooling-off period for sellers in NSW

Sellers in New South Wales who enter into an agreement with their real estate agent to sell their property, have a one-day cooling-off period, including Saturday, to exit that agreement with the agent. To take up the cooling-off period, the seller must give the agent a "notice of rescission" signed by all clients by 5pm on the day of cooling off.

Extra general information

Cancelling a real estate agent listing

If you’re unsatisfied with your real estate agent and you’d like to suspend the listing agreement, most agents are willing to cooperate if you provide a sufficient reason.

How to cancel a real estate agent listing

Make sure you have the right to cancel the listing by enquiring about it when you first sign your contract. If you decide to withdraw a listing, you will need to ask your agent directly to cancel the listing agreement. Take the following steps:

  • Re-visit listing agreement. Most listing agreements include a clause that allows you to cancel the contract without penalty. Be cautious of a listing contract that omits a clause that allows you to withdraw from the listing, and keep in mind that some contracts may outline that the agent will still be paid commission even if the contract is cancelled. This is because the agent may be out of pocket for any advertising costs that have already been incurred.
  • Contact your agent. You’ll need to speak with your real estate agent directly to notify them of the reason for cancelling the listing. If your agent won’t agree to cancel the listing, request a cancellation from the general manager of the agency. Typically real estate agents will cancel the listing upon your request as they want to uphold their reputation. However, in the event that the general manager refuses to cancel the listing, you should seek legal advice from a solicitor that specialises in property legislation. They will be able to facilitate the process on your behalf so you can terminate the contract effectively.
  • Follow up with agent. After you’ve made initial contact with the agent, it’s a good idea to follow up to ensure that the listing has been officially terminated and your property is no longer on the market.

Conveyancing and the cooling-off period

Conveyancing concerns the transfer of ownership from one person to another; that is, from the seller to the buyer. However, before the exchange happens, several stages have to occur, one of which is the cooling-off period. The cooling-off period begins the day there is an exchange of contracts, provided that it is a business day, and ends at 5pm on the fifth business day. However, if a property is acquired through an auction, a cooling-off period does not apply. During the cooling-off period, both parties have the right to cancel the contract. If this happens, a penalty will apply to the person who cancels the contract. If the cooling-off period ends and neither the seller or the buyer expressed any intention to cancel, they are legally bound to the contract.

Can a vendor pull out of a contract?

If you sign a contract to sell your house but then get cold feet, either during or after the buyer’s cooling-off period, there’s little you can do. There is no cooling-off period for sellers in Australia. Once contracts have been signed and exchanged, you are locked into the sale of your property under the terms you have agreed to.

As you will then be legally obliged to go through with the sale, it’s essential that you’re certain that you want to sell your home before you sign anything.

If you want to back out of a contract after it's been signed, you'll need to speak to a solicitor regarding your options.


Clear business days defined

The cooling-off period is effective when a property is acquired through a private treaty. This period usually consists of five clear business days. However, the cooling-off period can be extended or shortened, depending on the agreement of both parties.

In conveyancing, clear business days refers to regular business days including Saturday. Thus, if the exchange of contract happens on a Sunday or a holiday, the cooling-off period will commence the next day and will end after five days at 5pm.

What happens during the cooling-off period?

If you buy a property, the cooling-off period is, in theory, a grace period during which you can evaluate if the property is right for you. It also gives you time to re-think whether you will be able to comfortably manage the financing you have organised for the purchase. If you change your mind and cancel the contract during the cooling-off period, there is nothing the seller can do. However, there is a provision to compensate for any fees and effort already undertaken.

If you decide to terminate a contract, you will have to pay a penalty equivalent to 0.25% of the property’s purchase price. Thus, if the property cost $300,000, the penalty will be $750. The seller will then refund the deposit within 14 days, but may deduct the penalty from the amount. If you want to cancel the contract, you should give a letter of cancellation to the agent, informing them of your intent. You can either personally hand over the letter, or mail it to the agent’s business address.

Waiving the cooling-off period

It is possible for a buyer to waive the cooling-off period as long as the property is not sold through an auction, as stated under the Property, Stock and Business Agents Act 2002. If a buyer wishes to waive this right, they must sign the Office of Fair Trading waiver form one business day before signing the contract or agreement. Known as the 66W certificate, the form must be given to the seller or the seller's agent, and state that the lawyer is acting independently from the seller, that he will not gain any benefit or profit, and that he has informed the buyer about the impact and effect of waiving the cooling-off period.

Situations when the cooling-off period does not apply

The cooling-off period gives the buyer a chance to do further research before they commit to the sale contract. However, there are cases when this period does not apply, the most common one being when a property is sold at auction. After a property is sold at auction, the exchange of contracts takes place immediately, leaving no time for a cooling-off period. The Conveyancing Act 1919, Section 66T states that a cooling-off period does not only apply in situations where the client or buyer gives you prior to the exchange of contracts a 66W certificate which states that he is waiving the cooling off period. The Act also states that there is no cooling off period if the contract is made the same day as the property was put up for sale in an auction. Another situation that may nullify the cooling off period is when you consulted a lawyer before the signing.

The Conveyancing Act 1919, Section 66T states that a cooling off period does not only apply in situations where the client or buyer gives you prior to the exchange of contracts a 66W certificate which states that he is waiving the cooling off period. The Act also states that there is no cooling off period if the contract is made the same day as the property was put up for sale in an auction. Another situation that may nullify the cooling off period is when you consulted a lawyer before the signing of contract. The conveyancing process is often different from state to state. Therefore, it is better to ask your solicitor to give you light how conveyancing is done in the area where you live. It is imperative that you know and exercise your rights when dealing with legal matters such as conveyancing.

Would you like some professional help with your conveyancing matters?

TitleXchange offers fixed-price conveyancing to help you sell your property in the smoothest way possible. Fill out the form below to get in contact with a legal expert from TitleXchange.

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A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at finder.com.au. Talk to him to find out more about home loans.

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102 Responses

  1. Default Gravatar
    DeanFebruary 12, 2016

    During the cooling off period, we discovered serious structural issues with the building as a result of the building inspection. Subsequently, we reduced our offer on the property. The vendor has rejected this new offer. The property is in NSW. When we made our offer we said it was contingent on the building inspection (this was ìn writing). Does the vendor get to keep our deposit?

    • Staff
      BelindaFebruary 15, 2016Staff

      Hi Dean,

      Thanks for getting in touch.

      I’ve sent you an email to follow up with this enquiry.

      Thanks,
      Belinda

  2. Default Gravatar
    MarryJanuary 9, 2016

    Hi.We signed exclusive agency agreement from 20/10/2015-20/01/2016. It’s says on agreement if more than 90 days we have to give 30 days written notice to withdraw contract after 20/01/2016. We thought our contract is 90 days but when I counted days its actually 93 days.Does this mean i have to give 30 days notice or agent shouldn’t put 93 days?

    • Staff
      BelindaJanuary 11, 2016Staff

      Hi Marry,

      Thanks for reaching out.

      I’ve sent you an email to follow up with this enquiry.

      Thanks,
      Belinda

  3. Default Gravatar
    TaniaNovember 4, 2015

    Hi,

    Does the 3 day cooling off period start from the day the purchaser signs the contract or start from the day the vendors signed the contract ( ie: in my case 4 days after the purchaser signed the contract)?

    • Staff
      BelindaNovember 5, 2015Staff

      Hi Tania,

      Thanks for your enquiry.

      As illustrated in the above table, the terms of the cooling off period varies depending on the state in which you reside. However, please note that the cooling off period is for the buyer and not the vendor, and therefore if you are the vendor and you’ve signed the contract, you generally cannot back out of the sale.

      If you require further advice, you can fill out the online form on this page to speak with a conveyancer regarding your options.

      Thanks,
      Belinda

  4. Default Gravatar
    AlexOctober 31, 2015

    Sir/Madam, We have listed our home for sale in Tasmania. We now decided not to sell after all. We signed a contract with a real estate agent who put up a “for Sale” sign. Can we now stop the “for sale ” listing with the real estate agent? No one has opted to buy our home yet.

    • Staff
      MarcNovember 2, 2015Staff

      Hi Alex,
      thanks for the question.

      It might be a good option to read the agreement signed when you listed the property and see how you are able to terminate your contact.

      I hope this helps,
      Marc.

  5. Default Gravatar
    BrettOctober 27, 2015

    Hi
    I have just been informed that the buyer of my house has exercised their right to the cooling off period with respect to purchasing my house. They have requested the deposit be paid back. I want to exercise my right to .25 percent of the purchase price to cover costs. The problem is that they only put up one thousand dollars and .25 is higher than that. Can I request that they pay the extra?
    Thanks. Brett

    • Staff
      JodieOctober 29, 2015Staff

      Hi Brett,

      Thank you for reaching out to finder.com.au, a financial comparison website.

      The cooling off period terms are typically stated in the contract for sale that the purchaser signed so they should be aware that they are obligated to pay these funds to you, however you may want to communicate with your real estate agent as well as your solicitor as to how to proceed with the situation and go about the possibility of retrieving the money.

      This is general advice and it would be better to seek professional advice from the people you have worked with on this property sale.

      Regards
      Jodie

  6. Default Gravatar
    RoseSeptember 3, 2015

    Hi,

    I wanted to sell my house, when I paid my rates up until 31 December, I paid the full amount even though I was entitled to a discount. I now have money in credit. How do I go about keeping that credit? Will this be added to my settlement statement?

    • Staff
      JodieSeptember 3, 2015Staff

      Hi Rose,

      Thank you for contacting finder.com.au, a financial comparison website.

      We are not able to offer you specialised advice and I would recommend speaking to your solicitor regarding this as it tends to be something covered in the contract for sale.

      In general rates are calculated pro-rata at the time of settlement as to how much you, the vendor, has paid and then if there is any owning it is taken from the purchase amount. Alternatively as you have paid in advance there will be a rates payment paid by the purchaser included in the settlement that will cover the pro-rata amount that you have paid on the rates until 31 December.

      As I mentioned above this is something that would need to be discussed with your solicitor and real estate agent when you are selling.

      Regards
      Jodie

  7. Default Gravatar
    marieAugust 30, 2015

    Hi,
    Just a valuable question. We bought a house a month ago, the settlement period is 60 days. Now the seller has changed his mind as it is too low price and the property worth more. What can we do here?
    Thaks, Marie

    • Staff
      JodieAugust 31, 2015Staff

      Hi Marie,

      Thank you for contacting finder.com.au, a financial comparison website.

      We are not able to offer you specific advice however it would be advised that you seek legal advice from your solicitor. In general the seller nor the purchaser can pull out of the contract for sale once it has been signed and as this is a legal document it would be best to speak to a solicitor to discuss what your options are.

      Regards
      Jodie

  8. Default Gravatar
    AlanLindleyAugust 29, 2015

    Can a real estate agent get me to sign an exclusive authority when selling my house in Victoria for 180 days?.

    • Staff
      JodieAugust 31, 2015Staff

      Hi Alan,

      Thank you for contacting finder.com.au, a financial comparison website who offer generalised advice.

      There are four types of agent agreements that a real estate agent may ask you to sign when you are preparing to sell a property in Victoria. An open listing, multi listing, sole listing and an exclusive agency.

      They are able to ask you to sign an exclusive agency however you should consider that an exclusive agency means you have to only allow them to offer the property for sale so if for any reason you are not happy with their work you cannot switch to another agency.

      I hope this helps but do recommend you do further research before making a decision.

      Regards
      Jodie

  9. Default Gravatar
    noeleneJune 28, 2015

    Hi, I made an offer of a house that was for sale, and the vendor’s agent told me that they had accepted it, so I did the pest and building inspections- it cost me over $600- but just before the exchange of contracts, the vendor has now decided to take it off the market, with no explanation so far. Are they legally obliged to reimburse me the costs I have incurred so far, since I did those with the understanding that they had accepted the offer, and if not legally obliged, if I take them to court for reimbursement of the cost, would it likely rule in my favour?

    • Staff
      BelindaJune 29, 2015Staff

      Hi Noelene,

      Thanks for your enquiry.

      finder.com.au is an online comparison and general information service, so we are not in a position to give legal advice regarding your rights in this situation.

      Your best course of action would be to consult a lawyer. Alternatively, you can fill out the form on this page to speak with a professional conveyancer to discuss your options.

      Kind regards,
      Belinda

  10. Default Gravatar
    JoJune 1, 2015

    i have a block of land for sale and have accepted an offer,unfortunately they have been knocked back by 1 bank what is the law with this.They have gone through cooling of.When we purchased years ago we were made to go to 3 banks before we could pull out.

    • Staff
      JodieJune 3, 2015Staff

      Hi Jo,

      Thank you for contacting finder.com.au, a financial comparison website, we are not able to offer specified advice for your needs but are happy to give general advice where possible.

      Each contract for sale may contain alternate clauses with regards to a cooling off period I would suggest reviewing your contract and asking for the advice of your solicitor with regards to the offer that has been made.

      Regards
      Jodie

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