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How Cooling-Off Periods Work in Property Contracts
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How Cooling-Off Periods Work in Property Contracts
Buying a home can feel like a whirlwind. You find a place you love, the price is right, and before you know it, you’ve signed a contract.
But what happens if you wake up the next morning with doubts? Maybe your finances aren’t as certain as you thought. Maybe the building inspection turned up something concerning. Or maybe you’ve just realised you moved too fast.
That’s where the cooling-off period comes in. It’s a short window after you sign a contract during which you can change your mind and walk away. It’s not free, but it’s a lot cheaper than being locked into a purchase you’re not ready for.
Here’s how it works in Queensland.
Summary
- The cooling-off period in Queensland is five business days
- It starts the day you receive a copy of the contract signed by both parties
- It ends at 5pm on the fifth business day
- If you pull out during this time, you’ll lose 0.25% of the purchase price
- Cooling-off doesn’t apply to auctions, and you can waive it if you choose to
What is a Cooling-Off Period?
A cooling-off period is exactly what it sounds like: a chance to cool off and reconsider your decision after signing a property contract.
During this time, you can terminate the contract for any reason. You don’t need to explain yourself, and you don’t need the seller’s permission. You just need to give written notice before the deadline.
It’s a consumer protection built into Queensland property law under the Property Occupations Act 2014. The idea is to give buyers a bit of breathing room, especially in a market where things can move quickly, and decisions are sometimes made under pressure.
How Long Does it Last?
In Queensland, the cooling-off period is five business days.
A business day is any day that isn’t a Saturday, Sunday, or public holiday. So if you receive your signed contract on a Friday, that Friday counts as day one. But Saturday and Sunday don’t count, so day two would be the following Monday (assuming it’s not a public holiday).
The period ends at 5pm on the fifth business day. If you want to terminate, your notice needs to be in before that deadline.
Your conveyancer in Cairns can help you determine exactly when your cooling-off period ends so you don’t miss it.
When does the Cooling-Off Period Start?
The clock starts ticking on the day you receive a copy of the signed contract.
If you receive it on a weekend or a public holiday, the cooling-off period doesn’t start until the next business day. And if there’s ever a dispute about when you received it, the seller has to prove when it was delivered.
If the seller signed the contract before you did, then the period starts on the day you signed and communicated your acceptance, usually by handing a copy to the agent or seller.
How do you Terminate During Cooling-Off?
If you decide to pull out, you need to give the seller (or their agent) written notice. The notice should include your name, the property address, and a clear statement that you’re terminating under the cooling-off provisions.
You can deliver the notice by email, registered post, or in person. Whatever method you choose, make sure you’ve got proof it was sent before 5 pm on the final day. Timing really matters here.
A buyer’s solicitor can prepare and send this notice for you to make sure it’s done properly. It’s not complicated, but getting it wrong could cost you.
What Does it Cost?
Walking away during cooling-off isn’t free. The seller is entitled to keep 0.25% of the purchase price as a termination penalty.
That works out to:
- $1,250 on a $500,000 property
- $1,875 on a $750,000 property
- $2,500 on a $1,000,000 property
The penalty is deducted from your deposit. The remaining deposit must be refunded to you within 14 days.
It’s not a small amount, but it’s a lot less painful than losing a full 10% deposit or being forced to complete a purchase you can’t afford.
When Doesn’t Cooling-Off Apply?
The cooling-off period doesn’t apply to every contract. There are a few situations where you won’t have the option to walk away:
- Auctions. If you buy at auction, there’s no cooling-off period. Once the hammer falls and you sign the contract, you’re locked in.
- Follow-up sales after the auction. If a property passes in at auction and you were a registered bidder, you can negotiate a private sale afterwards. But if that contract is signed before 5 pm on the second business day after the auction, there’s no cooling-off.
- Option contracts. If you’ve entered into an option agreement to purchase the property, the cooling-off period won’t apply to the sale contract that follows.
- Certain buyers. Cooling-off also doesn’t apply if the buyer is a publicly listed corporation or a subsidiary of one.
If you’re not sure whether cooling-off applies to your contract, a buyer’s conveyancer can check for you.
Can You Waive the Cooling-Off Period?
Yes, you can. And in some situations, buyers choose to do exactly that.
Waiving the cooling-off period makes your offer more attractive to the seller by giving them greater certainty. In a competitive market, where multiple buyers are circling the same property, it can be the difference between winning and losing.
But it’s a risk. If you waive cooling-off and something goes wrong, like your finance falling through or a serious defect turning up, you won’t have an easy exit. You could lose your full deposit or be sued for breach of contract.
If you’re thinking about waiving, get advice first. A solicitor in Cairns can walk you through the risks and help you decide whether it’s worth it.
What About Sellers?
Cooling-off is a buyer’s right, not the seller’s. Sellers can’t terminate under the cooling-off provisions.
That said, sellers aren’t completely unprotected. If a buyer pulls out during the cooling-off period, the seller keeps 0.25% of the purchase price. And if a buyer tries to terminate outside the cooling-off period without a valid reason, they could be in breach of contract.
If you’re selling and want to understand how cooling-off might affect your transaction, a seller’s conveyancer can explain how to manage the risk and what to expect if a buyer does decide to walk away.
The Property Warning Statement
Every residential property contract in Queensland must include a warning statement that tells the buyer about their cooling-off rights. It must appear on the same page as the buyer signs, or directly above the signature line, and be clear and easy to read.
The warning explains that the contract may be subject to a five-business-day cooling-off period and that a 0.25% penalty applies if the buyer terminates. It also recommends that the buyer get independent legal advice and a property valuation before signing.
If this statement is missing, the agent or seller may be in breach of the law.
Why Cooling-Off is So Important
The cooling-off period isn’t a get-out-of-jail-free card, but it is a valuable safety net. It gives you time to get your finance confirmed, review the building and pest reports, and make sure you’re comfortable with what you’re signing up for.
If you’re not sure whether to use it, or you’re considering waiving it to strengthen your offer, it’s worth speaking with your conveyancer or solicitor first. A few minutes of advice now could save you a lot of stress later.
Disclaimer: This blog is intended for informational purposes only and does not constitute legal advice. For guidance tailored to your specific circumstances, please consult a qualified legal representative.