Cooling off period refers to the length of time during which a homebuyer can return the property or cancel the sales contract. The length of this period varies from one state to another. Some states have it while others don’t. But when you can you not exercise your right to a cooling off period even if you can?
In Victoria, the cooling off period is three days while in Queensland, it is 5 days. In Southern Australia, buyers have the right to a 2-business day cooling off period. In the Northern Territory of Australia, home buyers can cancel the contract within 4 business days from the time the conveyance or legal representative receives the sales contract. In ACT and NSW, home buyers can cancel the contract within five business days. The length of time may also depend on the terms of the contract. Usually, there are different terms set out for each contract, so the transactions need to be treated differently.
This right is not available to homebuyers in Western Australia and Tasmania. Also, this period does not apply if you buy the property at auction. So, it is important that you learn when you can and cannot exercise your right to a cooling off period. You need to know how it works. Although laws vary with every state, the period usually starts from the day the buyer signs the Contract of Sale. The buyer and seller may also agree on extending the cooling off period, but this should be clearly stated in their contract.
Although a cooling off period allows a buyer to change his mind at the last minute, it doesn’t mean that there are no consequences. A buyer may have to forfeit a portion of the purchase price. The bigger the purchase price, the bigger the forfeited amount. This is a safeguard designed to discourage buyers who hastily enter into contract just to back out at the last minute.
Many homebuyers use this period to get a pre-purchase inspection. This way, they could back out from the purchase if the inspection report reveals structural issues and problems. After all, a house is a huge investment. If you are thinking of buying a home, you should consider getting a pre-purchase inspection now or during the cooling off period when you can still cancel the contract.
