Purchasing a property is a big deal! Finding the right property that meets your needs and desires can be difficult. When you think you have found the right property and have signed the contract of sale, it could be comforting to know that you have a cooling off period.
Section 31 of the Sale of Land Act provides a 3-day cooling off period to Purchasers who enter into a sale of a residential land contract. Any notice to terminate the contract and make use of the 3-day cooling off period must be served on the Vendor, or the Vendor’s agent, within three (3) clear business days after the Purchaser has signed the Contract.
The 3-day cooling off period begins from the date upon which the Purchaser signs the contract whether or not the contract becomes binding.
When will the right not apply?
This right will not apply where:
- The sale is by a public auction;
- The contract is signed by the purchaser:
- Three clear business days before or after an auction is publicly advertised;
- On the day of the auction (even though it may not be at the auction);
- The parties have previously entered into a contract for the same land in substantially the same terms.
Should a Purchaser be successful at an auction and purchase the property, the 3-day cooling off period does not apply. Should the property pass at auction and the Purchaser signs the contract the day of the auction or within 3 days either side of the auction, unfortunately, the cooling off period still does not apply.
Exercising the Right to Cool Off
If the Purchaser wishes to terminate the contract and invoke the 3-day cooling off period, the Purchaser must provide written notice to the Vendor or their Agent.
The Purchaser is entitled to receive the deposit back less $100 or 0.2% of the purchaser price, whichever is greater.
Signing the Contract of Sale
It is important that when you sign a contract of sale you read carefully what you are signing, or have a lawyer look over the contract for you and provide you with legal advice.
Contracts of Sale will have an ‘Important Notice to Purchasers’ note on the signing page which will detail your cooling-off rights. These notices look something like this:
IMPORTANT NOTICE TO PURCHASERS
Sale of Land Act 1962
You may end this contract within 3 clear business days of the day that you sign the contract if none of the exceptions listed below applies to you.
You must either give the vendor or the vendor's agent written notice that you are ending the contract or leave the notice at the address of the vendor or the vendor's agent to end this contract within this time in accordance with this cooling-off provision.
You are entitled to a refund of all the money you paid EXCEPT for $100 or 0.2% of the purchase price (whichever is more) if you end the contract in this way.
The 3-day cooling-off period does not apply if—
- you bought the property at or within 3 clear business days before or after a publicly advertised auction; or
- the property is used primarily for industrial or commercial purposes; or
- the property is more than 20 hectares in size and is used primarily for farming; or
- you and the vendor have previously signed a contract for the sale of the same land in substantially the same terms; or
- you are an estate agent or a corporate body.
If you are looking at purchasing your next property or selling your property, contact Legal Essentials on (03) 9326 2627 and we will be more than happy to assist you.