Buyers on the southern Gold Coast often look at properties on both sides of the border. The cooling-off period that applies depends on the state the property is in, and Queensland and New South Wales count it differently.
What is a cooling-off period?
A cooling-off period is a short window after a contract to buy a residential property has been signed, during which the buyer can end the contract without giving a reason. Ending the contract this way generally costs the buyer a small, fixed penalty. When the period starts, and how it is counted, depends on the state where the property is located. Queensland and New South Wales count it differently.
How does the cooling-off period work in Queensland?
In Queensland, a buyer of residential property generally has a cooling-off period of five business days. The period starts on the day the buyer receives a copy of the contract signed by both the buyer and the seller. If that day is not a business day, it starts on the next business day. It ends at 5 pm on the fifth business day.
To end the contract, the buyer must give the seller, or the seller’s agent, a signed written notice before 5 pm on the last day. Because the start date turns on when the signed contract is received, buyers should keep a record of that date and speak with their lawyer early in the period.
What does it cost to withdraw in Queensland?
If a Queensland buyer ends the contract during the cooling-off period, the seller may keep a termination penalty of up to 0.25% of the purchase price. For example, the penalty is up to $2,000 on an $800,000 purchase. The penalty is taken from the deposit, and the seller must refund the rest of the deposit within 14 days.
When is there no cooling-off period in Queensland?
In Queensland, in addition to more specific types of transaction, there is no cooling-off period where:
- the property is bought at auction;
- the property is used mainly for industry, commerce or primary production; or
- the contract results from exercising an option, and the parties to the contract are the same as the parties to the option.
Additionally, a buyer can choose to shorten or waive the cooling-off period by giving the seller or the seller’s agent written notice. A seller or agent may ask for this, but the choice is the buyer’s. Our team recommends that buyers get legal advice before agreeing.
How does the cooling-off period work in New South Wales?
In New South Wales, a purchaser of residential property generally has a cooling-off period of five business days, or ten business days for an off-the-plan contract. The period starts when the contract is made, which is usually when contracts are exchanged. It ends at 5 pm on the fifth business day after the day of exchange (or the tenth business day for off the plan). The day of exchange itself is not counted.
Times are measured in Sydney time. This matters on the border: during daylight saving, 5 pm in Sydney is 4 pm in Queensland.
To end the contract, the purchaser or the purchaser’s solicitor must sign a written notice of rescission and serve it on the vendor, the vendor’s solicitor or the vendor’s agent before the deadline. If there is more than one purchaser, each purchaser (or their solicitor) must sign. A notice served after completion has no effect.
What does it cost to withdraw in New South Wales?
A New South Wales purchaser who rescinds during the cooling-off period forfeits 0.25% of the purchase price to the vendor. For example, the purchaser forfeits $2,000 on an $800,000 purchase. The vendor can take this amount from the deposit and must repay the balance of the deposit to the purchaser. If the deposit paid is less than the amount forfeited, the vendor can recover the difference from the purchaser. The vendor may choose to waive the forfeit.
Apart from this, neither party is generally liable to pay the other damages, costs or expenses. Stamp duty on a rescinded contract stops being payable and any duty already paid can be refunded.
When is there no cooling-off period in New South Wales?
In New South Wales, there is no cooling-off period where:
- the property is sold at public auction;
- the contract is made on the same day that the property was offered at public auction and passed in;
- at or before exchange, the buyer gives the seller a certificate from the buyer’s solicitor (known as a section 66W certificate); or
- the contract results from exercising an option (other than an option that is void).
The cooling-off period also does not apply to property that falls outside the legal meaning of ‘residential property’, such as land over 2.5 hectares, or to certain specialised contracts.
The period can be shortened by a term in the contract or by agreement. However, the shortening only takes effect once the buyer gives the seller a section 66W certificate. The certificate must be signed by a solicitor or barrister who is not acting for the seller. It must confirm that the lawyer has explained the contract and the effect of the certificate to the buyer.
What is the key difference between Queensland and New South Wales?
For buyers looking at properties on both sides of the border, one difference is worth keeping in mind from the start:
In New South Wales the cooling-off clock starts when contracts are exchanged, but in Queensland it starts only when the buyer receives a copy of the contract signed by both parties.
How our team can help
If you are buying a property in Queensland or New South Wales, our team can review the contract with you before you sign and explain how the cooling-off period applies to it. It also helps to understand why due diligence matters before you sign. Our team advises clients on property and conveyancing in Queensland and New South Wales.
Frequently asked questions
QDoes the cooling-off period apply when I buy at auction?
Queensland – No. A contract formed at a Queensland auction has no cooling-off period. The same applies to a contract signed by 5 pm on the second clear business day after the property was passed in, if the buyer was a registered bidder at the auction. Buyers at auction should have finance, inspections and legal advice in place before bidding.
New South Wales – No. There is no cooling-off period for a property bought at public auction in New South Wales, or for a contract made on the same day the property was offered at auction and passed in. A contract made on a later day will usually have the normal cooling-off period, unless it has been shortened or waived with a section 66W certificate.
QCan the cooling-off period be extended?
Queensland – The Queensland rules allow a buyer to shorten or waive the cooling-off period. Our team has not identified a right for a buyer to extend it. A buyer who needs more time for inspections or finance would usually negotiate conditions in the contract, such as a building and pest inspection condition or a finance condition.
New South Wales – Yes. The cooling-off period can be extended by a term in the contract, or by the seller agreeing in writing before the period ends. An extension can be agreed before, at or after exchange. A buyer who wants more time should ask for it well before the deadline.
QWhat happens to my deposit if I withdraw during the cooling-off period?
Queensland – The seller may keep a penalty of up to 0.25% of the purchase price from the deposit. The seller must refund the balance within 14 days.
New South Wales – The buyer forfeits 0.25% of the purchase price, which the seller can take from the deposit. The rest of the deposit is repaid to the buyer. If the deposit is less than the forfeited amount, the buyer may still owe the difference.
QDoes a cooling-off period apply when I sell, rather than buy?
Queensland – No. In Queensland, the cooling-off period for a residential sale contract is a right for the buyer only. A seller who has signed and entered into the contract cannot withdraw during that period simply because they have changed their mind. Sellers should be comfortable with the price and terms before they sign.
New South Wales – No. In New South Wales, the cooling-off period for a residential sale contract is a right for the buyer only. A seller who has signed and entered into the contract cannot withdraw during that period simply because they have changed their mind. Sellers should be comfortable with the price and terms before they sign. There is a separate, short cooling-off period for a seller’s agency agreement with a real estate agent for residential or rural property. It ends at 5 pm on the next business day or Saturday after the agreement is signed, unless it has been waived in the approved way. This applies to the appointment of the agent, not to the sale contract.
Disclaimer: The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice. Readers should seek legal advice about their specific circumstances.
