New South Wales, South Australia, Victoria, Queensland and the Northern Territory all have what is known as a cooling-off period. This means that purchasers of residential property are able to terminate a contract within two to five days of signing it, depending on the state or territory. If a purchaser exercises this option, they are entitled to a return of their deposit. However, in some states there will be a small penalty.
For example, in New South Wales, the Northern Territory and Queensland the penalty is 0.25 per cent of the purchase price. In Victoria a deduction of the greater of $100 or 0.2 per cent of the purchase price will be made.
The option can be exercised, provided:
In Victoria, the property also has to have a value of less than $250,000. This does not apply in other states.
The cooling-off period does not apply if:
The cooling-off period begins on the first business day after the purchaser signs a contract of sale, regardless of whether the vendor has signed the contract. If the vendor decides to make a counter offer the purchaser is entitled to another cooling-off period if the purchaser decides to accept the offer.
Note: Tasmania, Western Australia and the ACT have no cooling-off provisions.
In all states and territories with cooling-off provisions, a purchaser can waive their cooling-off period. This is no great benefit to either party, except that it may make a useful negotiation tool if the purchaser has a keen vendor. They may be able to make a slightly lower offer in exchange for waiving the cooling-off period. However, they should be very sure that they will not want to change their mind if this is what they decide to do.