Cooling off period - Cost of changing your mind
This information has been provided by Australian law firm, Australian Conveyancing Services and is applicable in Queensland only.
Whilst it is a good idea to check things out before you sign a Contract, the law in Queensland provides you with a 'cooling off period' after you sign the Contract.
When does the Cooling Off Period apply?
Buyers have a cooling-off period for Buyers on all contracts for the purchase of residential property in Queensland. This means that a Buyer can terminate the contract within a period of 5 working days after the cooling off period commences.
NOTE: The cooling off period does not apply to AUCTION sales of residential property. However if the property is passed in at auction, and the buyer and seller negotiate a contract afterwards, then the cooling off period will apply.
When does the Cooling off period start?
The Cooling Off period starts from the day after the legal date. The legal date is the day that the Contract becomes 'binding on the Buyer', which is the day that all Buyers receive a physical copy of the Contract (signed by the Buyer and Seller). This date may not be noted on the Contract (ie. it is not necessarily the Contract date). The Contract must be received before 5.00pm on the legal date for that day to count as the legal date. The legal date can be a weekend or public holiday. The cooling off period starts on the next business day. It ends at 5:00 pm on the fifth business day after that.
Example: If the legal date falls on a Tuesday, the cooling off period will end at 5.00pm on the following Tuesday.
It is a good idea to keep evidence of when the cooling off period starts. For example, the seller or their Agent could deliver the contract personally to the Buyer and ask for a notice of receipt, or they could send the contract by fax and keep the fax transmission statement.
A buyer may terminate within the cooling-off period by giving a notice in writing to the Seller or their Agent. This is an absolute right and no reasons need to be given, however, there is a cost to terminating. If a buyer terminates under the cooling-off period a "termination penalty" must be paid to the seller. That termination penalty is 0.25% of the purchase price under the contract. If you would like to know what the amount could be, insert a purchase price in the calculator below.
Where a contract is terminated by a buyer within the cooling-off period, the seller must refund the deposit within 14 days, but the seller is permitted to deduct the termination penalty.
Waiver of cooling-off period
The cooling-off period can be waived by a buyer but only by the buyer following a very strict procedure as set out in the Act. A buyer must obtain from a solicitor a certificate in the approved form, where the solicitor declares amongst other things, his or her independence of the real estate agent, that they are not receiving any benefit under the transaction, and that the solicitor has explained the effect of waiving the cooling-off period and purpose and legal effect of giving the certificate to the buyer.
The cooling-off period may alternatively be shortened using a similar procedure.
Pre-contractual legal advice
One could be forgiven for believing that now that there is a 5-business day cooling-off period that the importance of obtaining pre-contractual legal advice is minimal. That is not really the case. As we have seen, there is a cost in terminating under the cooling-off period.
Obtaining pre-contractual advice from your solicitor could be as simple as arranging for the agent to fax the proposed contract through to your solicitor, and your solicitor providing advice and input to you over the telephone. If you are using the Quicklaw DIY service, you can have your Contract reviewed before signing for a small additional fee.
Now, due to sales pressure or impulse resist the temptation to sign a contract prior to seeing solicitor.