How The Cooling-Off Period Works In Queensland Contracts

Buying a property can be an exhilarating experience and can often move incredibly quickly once your offer has been accepted. Sometimes, though, things feel like they are moving a little bit too fast and you may begin to wonder if you have made the right investment. Fortunately, something called a ‘cooling off period’ exists.

What is a cooling-off period?

A cooling-off period affords a buyer of residential property the chance to back out of the contract of sale if they decide they no longer want to follow through with the purchase. Cooling-off periods carry strict time limits and once the cooling-off period has expired the sale will progress towards settlement.

How long is the cooling-off period on properties in Queensland?

In Queensland, the cooling-off period is in effect for five business days, with the commencement of the period being the day the buyer receives a copy of the contract, which has been signed by both the vendor (seller) and the buyer.

At 5pm on the fifth business day, the cooling-off period will expire. If by this time the buyer has not given notice to the seller that they wish to cancel the contract of sale, then they are bound by the terms of the contract and must follow through with the purchase.

In these circumstances, a ‘business day’ refers to any day which is not a weekend or public holiday. An example scenario is if a buyer receives a copy of the signed contract on a Saturday, the cooling-off period would not start until the next business day (usually the following Monday except when that Monday is a public holiday).

Which properties are exempt from cooling-off periods?

Buyers will be pleased to discover that, in Queensland, most contracts for the sale of residential property are subject to a cooling-off period, however, it is important to know that not all contracts have a cooling-off period. Examples of situations where a cooling-off period will not apply include:

• properties which were bought at auction;
• sales where a publicly listed corporation is the entity named as the buyer;
• in situations where three or more lots are being purchased by the same buyer; and/or
• where the cooling-off period has been waived by the buyer after the legal implications of waiving the cooling-off period have been explained to them by a conveyancer or lawyer. A buyer can only waive the cooling-off period in writing to the vendor.

I want to cancel my Contract Of Sale during the cooling-off period. How do I go about it?

To cancel a purchase during the cooling-off period, the Buyer must provide the Seller with written notice outlining their intention to cancel the contract. This notice must be provided during the cooling-off period, the deadline of which is 5pm on the fifth day after the cooling off period starts.

Is there a penalty for backing out of a purchase during the cooling-off period?

Yes. In Queensland, if the prospective Buyer decides not to purchase the property during the cooling-off period, the Seller is entitled to retain 0.25% of the purchase price from the deposit. The rest of the deposit (if any) must be refunded to the Buyer within 14 days.

Cooling-off periods, time limits and penalties vary from state to state, so what applies in Queensland may not necessarily apply in other states and vice versa. If you have purchased a residential property in Queensland and you are unsure about whether a cooling-off period applies to your purchase you should speak to a conveyancer as soon as possible.

Cairns Conveyancing Solicitors offers a free contract review, in which we will outline your obligations under the contract before signing. Get in touch with us today to arrange one.