In QLD, the standard REIQ contract used for buying a residential property allows for a cooling off period of 5 business days. This means that if you a sign a contract but no longer want to proceed with the purchase, you can cancel the contract during the cooling-off period.
Exceptions
It is important to note that the cooling off period does not apply to contracts:
- for a property sold at an auction;
- entered into within 2 business days of an unsuccessful auction; or
- where the buyer was a registered bidder at the auction.
When does it start & end?
The cooling off period starts on the day you receive from the seller or their agent a copy of the contract signed by both parties. If you receive the contract on a non-business day (i.e. a Saturday, Sunday or a public holiday), the cooling off period will start on the next business day.
If the seller signs the contract before you, the period starts on the day you sign and communicate acceptance to the seller (i.e. acceptance can be communicated by providing the seller or their agent with a copy of the signed contract).
The cooling off period ends at 5:00 pm on the 5th business day after it starts.
Termination & Penalties
You are entitled to terminate the contract anytime during the cooling off period. However, be aware the seller will be entitled to retain 0.25% of the total purchase price and take this amount out of the deposit paid under the contract.
To terminate during the cooling-off period, you must:
- give written notice to the seller (and their agent); and
- deliver the notice before 5:00 pm on the final day of the cooling off period.
The seller will have 14 days after termination to refund the balance deposit to you (i.e. the deposit less the penalty of 0.25%).
Waiver of the cooling off period
You can choose to waive or shorten the cooling off period by giving written notice to the seller. Note, if you waive the cooling off period on an unconditional contract (i.e. the contract is not conditional on finance or a satisfactory building and pest inspection), you will have no contractual right to terminate (short of unusual circumstances).
Why waive?
You may want to waive the cooling off period to make your offer more competitive in a situation where there are a number of other buyers looking to buy the same property. A waiver may give the seller a higher level of certainty that you are committed to the purchase.
Waiving the cooling off period is also common for a vacant land purchase where no building and pest inspection is required, and a buyer has already secured finance or is making a cash offer.
Give us a call
If you are buying or selling a property in the near future and you want to discuss the issues raised in this article—please don’t hesitate to give any of our lawyers a call.
