In New South Wales, when buying a property, the cooling-off period is five business days, during which the buyer can reconsider their purchase. The cooling-off period starts the day following exchange.
The cooling-off period only applies to private treaty sales of residential property.
During the cooling-off period, the buyer can withdraw from the contract by giving written notice to the seller or their representative. The buyer will then be entitled to a refund of the deposit, less a fee of 0.25% of the purchase price. However, if the buyer does not give notice within the cooling-off period, they may forfeit their deposit.
Legislative limits on situations where a cooling-off period applies include:
1. The cooling-off period does not apply to the sale of commercial properties. It only applies to residential properties.
2. The cooling-off period does not apply to properties sold at auction. Auction sales are considered final, and buyers are expected to complete the purchase if they win the auction.
3. The cooling off-off period does not apply if the contract is made on the same day as the property was offered for sale by public auction but passed in.
4. The cooling-off period does not apply if the buyer has already waived their right to a cooling-off period in writing.
5. The cooling-off period does not apply to land that is more than 2.5 hectares in area.
It's important to note that these exceptions are prescribed by law and cannot be altered or removed by the seller or the buyer. Buyers should always check if the cooling-off period applies to their purchase and seek legal advice if they are unsure.
During the cooling-off period, the buyer may conduct due diligence such as ordering a strata report if the property is an apartment or arranging finance if a bank will be financing the purchase. If the purchaser decides to cool-off, then they may rescind the contract prior to 5pm on the fifth business day of the cooling-off period. Recission of the contract means that the purchaser is no longer bound by the contract and may walk away without any penalty less a fee of 0.25% of the purchase price.
It is important to note that the right to rescind during the cooling-off period only applies to the buyer and the buyer may unilaterally rescind the contract during this time. The right to rescind during the cooling-off period does not apply to the seller. If the buyer does not rescind during the cooling-off period, then the contract will become unconditional by default and the purchaser will need to settle by the agreed date.
*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.*
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