Real Estate Sale Contract Cooling Off Period Nsw
What is a cooling off period?
A cooling off period is a certain amount of time that a buyer can withdraw from a contract of sale without incurring any penalty. In New South Wales (NSW), the cooling off period for residential property is five business days, starting from the date the buyer signs the contract and exchanges it with the seller or seller's agent.
Do all contracts have a cooling off period?
No, not all contracts have a cooling off period. Contracts for the sale of commercial properties, auctions, and contracts that have been exchanged on the same day as the auction do not have a cooling off period.
What can a buyer do during the cooling off period?
During the cooling off period, a buyer can do their due diligence on the property. This includes getting a pest and building inspection, checking the zoning of the property with the local council, and reviewing the strata report (if applicable).
How does a buyer withdraw during the cooling off period?
To withdraw from the contract during the cooling off period, the buyer must provide written notice to the seller or seller's agent. The notice must be delivered before the cooling off period expires.
Is there a penalty for withdrawing during the cooling off period?
No, there is no penalty for withdrawing during the cooling off period. However, the seller can keep 0.25% of the purchase price as compensation for any expenses incurred during the sale process.
Can the cooling off period be waived?
Yes, the cooling off period can be waived if both the buyer and seller agree in writing. This is usually done when the buyer wants to secure the property quickly and is willing to forego their right to a cooling off period.
What happens after the cooling off period?
After the cooling off period, the contract becomes binding on both the buyer and seller. The buyer must pay the deposit (usually 10% of the purchase price) and settle the balance on the agreed settlement date.
What if the buyer finds a problem with the property after the cooling off period?
If the buyer finds a problem with the property after the cooling off period, they may be able to terminate the contract if the problem is serious enough. This will depend on the terms of the contract and the nature of the problem.
What if the seller wants to cancel the contract during the cooling off period?
The seller cannot cancel the contract during the cooling off period. However, if the buyer withdraws during the cooling off period, the seller can put the property back on the market.
What if the buyer changes their mind after the cooling off period?
If the buyer changes their mind after the cooling off period, they may still be able to terminate the contract if there is a breach of contract by the seller or if the seller has misrepresented the property in some way.
Conclusion
The cooling off period is an important safeguard for buyers in NSW when purchasing residential property. It gives them a chance to do their due diligence on the property and withdraw from the contract without penalty if they change their mind. However, it is important to note that not all contracts have a cooling off period, and buyers should always seek legal advice before signing any contract of sale.