27 Nov Cooling Off Period – What are your rights?
You do have a ‘get out clause’ when buying property in Queensland, known commonly as a Cooling Off Period – however there are certain conditions that apply to the Cooling Off Period that you need to be aware of when reading your contract.
Your Top Gun Conveyancing solicitor will advise you as to your rights, however here are some things you need to understand:
The Cooling Off Period may only be available if the Property Occupations Act 2014 (POA) applies.
The POA relates to contracts for sale on residential property, it won’t apply to a contract where the property:
- is used for industry, commerce or primary production (i.e. farming)
- is purchased at auction
- A follow up sale after the property has been passed in at auction (before 5pm on the second business day) and you were a registered bidder
- An option contract (or sale contract formed as the result of an option contract)
- Where the buyer is a publicly listed corporation or a subsidiary thereof, a State or statutory body or you are purchasing at least three lots at the same time (even if under separate contracts)
IMPORTANT: For residential buyers buying at auction: You will not come under the application of a POA and therefore cannot have a cooling off period applied to your contract.
How does the cooling off period work?
If you have the POA applied (i.e. your Queensland property doesn’t fall into the above brackets and is under a private treaty sale – not auction), you may be entitled to a five business day cooling off period.
The cooling off period expires at 5pm on the fifth business day from when you enter the contract. That meaning, for example, if you sign the contract on a Saturday, the five day period doesn’t begin until 9am Monday. The cooling off period cannot be extended.
As the buyer, will I be penalised if I use my cooling off period to pull out of the purchase?
You can be. The seller has the right to withhold 0.25% of the agreed purchase price from your deposit. For example, if you pulled out of the purchase of a $650,000 property during the cooling off period, the seller has the right to keep $1450 from your deposit paid.
Sellers don’t always keep the 0.25%, but, so there are no surprises, be aware that most would and they are well within their rights to do so. Remember the 0.25% relates to the agreed price for the property – not the amount used as deposit.
What happens to the remainder of the deposit that I’ve paid?
Your deposit, paid according to the reference schedule of the contract, will usually be kept by the Seller’s Real Estate Agent as the deposit holder, typically in a Trust Account.
The onus is on the Seller to authorise the deposit’s release (minus the 0.25% penalty) within 14 business days of the cooling off period being invoked.
From a Seller’s perspective, it is equally incumbent on the Real Estate Agent to forward the 0.25% penalty amount.
When you are looking at the contract for your real estate property in Queensland, it is worthwhile understanding the cooling off period in case something does go wrong or as a Buyer you change your mind shortly after signing the contract.
Our experienced team here at Top Gun Conveyancing in Brisbane and on the Sunshine Coast can advise you when looking at the conveyancing for your Queensland real estate to ensure you avoid any dramas.