Understanding the Cooling-Off Period in NSW Real Estate Contracts
Understanding the Cooling-Off Period in NSW Real Estate Contracts
When buying property in New South Wales, one of the most important protections available to purchasers is the cooling-off period. This standard inclusion in most NSW real estate contracts of sale gives buyers a vital window to finalise their due diligence before committing fully to the purchase.
What Is the Cooling-Off Period?
The cooling-off period in nsw comes as a standard 5 business day timeframe, unless negotiated otherwise (excluding weekends and public holidays) that begins on the next business day after contracts have been exchanged—that is, when signed contracts are signed “swapped” or exchanged between the buyer and the vendor. This period is designed to give buyers time to:
- Have their conveyancer or solicitor review the contract thoroughly.
- Obtain formal finance approval if they are financing for their purchase.
- Conduct a Building and Pest Report, Strata Report if not already provided.
You may have already seen a property advertised as under contract. This means that terms have been agreed to and although contracts have been signed and exchanged there is still a cooling off period in place in favour of the purchaser. At this point its too late, so don’t bother trying to make a higher offer as the owner is locked in and cant sell the property to anyone else unless the buyer exits the contract.
Why Buyers Should Take the Cooling-Off Period if Offered.
If offered, take the cooling-off period!
If the agent is offering to exchange the contracts with a cooling off period for you dont hesitate. It locks the vendor into the sale and protects the buyer from being gazumped—a situation where the seller accepts a higher offer after you've agreed to terms and even may have already paid the deposit. Until contracts are exchanged, there is no legally binding relationship and the property technically still remains on the market, regardless of verbal assurances from the agent or the owner. And yes, even if you have paid a deposit, it still doesn’t secure the property until contracts are signed by all and exchanged.
For buyers relying on finance in the current market it is common practice to request a 10-day cooling-off period as opposed to the standard 5 days to allow time for the lender to issue formal approval.
What Happens If You’re a Cash Buyer?
If you're a cash buyer and all necessary reports have already been provided, the owner may request whats called a "66W certificate". This document, signed by you and your solicitor, waives your right to a cooling-off period—similar to buying at auction, where no cooling-off period applies.
Deposits and Contract Exchange
To exchange contracts with a cooling-off period, the minimum deposit an agent can accept allowing you exchange a contract is 0.25% of the purchase price (a quarter of 1%). The balance of the deposit—commonly 10%, though sometimes negotiated to 5%—is due at the expiry of the cooling-off period. If there is no cooling-off period or the sale is via Auction, the full deposit is payable at the time of exchange. Once the full deposit is received, the contracts have been exchanged and cooled off “meaning there is no cooling off period left to expire after 5pm on the last business day” then the property officially becomes sold and the sold sticker can go up.
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At Laurence Morgan, we’re here to guide you through every step of the buying process. Register for our Property Alerts to stay ahead of new listings, and reach out to our team if you have any questions about buying real estate in NSW.
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