It's getting hot in here - understanding cooling off periods

If you have made a property purchasing decision you have since regretted, you may be looking for a way to get out of the contract.  The cooling off period offers a way to get out of the contract in the first few days after signing on the basis of changing your mind (so you don't need to prove any fault with the seller or house). Here are some tips on when you can utilise a legal option of a cooling off period to get out of your contract.

Avoid auction buying

Cooling off periods do not apply to auctions in any state. The exciting atmosphere can contribute to a tendency to enter into a bidding war that you may later regret, so it can be good to use a proxy bidder or bring a friend to make sure you don't inadvertently overbid on a property you aren't confident on.

Get in quick

The cooling off period is quick, ranging from 2 days in South Australia through to 3 days in Victoria, 4 days in the NT and 5 days in NSW, ACT and Qld. WA has the longest cooling off period at 10 days. Tasmania doesn't have a cooling off period so it's not the best spot for second thoughts on property purchases! The clock starts ticking from the point that you have received a copy of the contract signed by both parties or the next business day if this is a weekend day or public holiday.

Get out the cheque book

In NSW, Qld and ACT you'll need to forfeit 0.25% of the purchase price in order to trigger the cooling period, where in Vic it's 0.20%. WA and NT have no financial clauses to trigger their cooling off periods. While the percentage is low in the eastern states, it can be a significant amount, especially if your property price is in the 7 figure range, so it's definitely worth considering before you trigger the cooling period. They can take this money out of any deposit you have lodged with them.

You can waive the right to a cooling off period

If you sign a clause waiving your right to a cooling off period, this will limit your fallback if the property turns out to have issues you hadn't expected. You should get advice before giving up your right to a cooling off period.

If you are looking at triggering your cooling off period due to a change in your financial circumstances, concerns about the property or any other reason it's worth speaking to a property lawyer. An experienced property lawyer can guide you through the process with the minimum of fuss so you won't get saddled with a property you no longer want to own.