18 Dec The Cooling Off Period – A Buyer’s perspective
The Queensland Government's new Property Occupation Act 2014 (The Act) provides for a five (5) business days cooling off period for contracts for the sale of residential property (eg house and land), home units, town houses and vacant residential land, except for a contract:
(1) formed on a sale by auction;
(2) entered into by 5pm on the 2nd clear business day after auction by a registered bidder at the auction
of the property;
(3) where the buyer is the State Government or statutory body;
(4) where the buyer is a listed public company or subsidiary;
(5) where the Buyer is purchasing at least 3 lots at the same time;
(6) entered into pursuant to an option if the buyer is the grantee.
The Act provides the Seller must include the following statement in the contract, immediately above, and on the same page as the Buyer signs the contract:
‘The contract may be subject to a 5 business day statutory cooling-off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the statutory cooling-off period. It is recommended the buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling-off rights, before signing.’
The five (5) business days cooling off period begins on the day that you are bound by the contract which you sign, that is (at least in most cases), the day when the contract or a copy thereof signed by or on behalf of the seller is delivered either to you or to your solicitors or agent. The cooling off period ends at 5.00p.m. on the fifth business day after the cooling off period started. For example:
Assume you receive a copy of the relevant contract from the seller/seller’s agent at any time on a Monday. Assume also that the cooling-off period is not affected by a day that is not a business day. The cooling-off period ends at 5p.m. on the following Friday.
You may terminate the contract at any time before the end of the five (5) business day cooling off period by giving a signed and dated notice to the seller or the seller's agent indicating that you wish to terminate the contract. The seller must refund your deposit within fourteen (14) days of the termination of the contract, however, the seller may deduct a termination penalty equivalent to 0.25% of the purchase price.
The main purpose of the Cooling Off Period is to allow you to seek independent advice from your legal representatives, financial planners, investment consultants, property analysts, valuers or taxation consultants. We suggest that you seek your own independent advice from the aforementioned professionals should you require any information which they would provide.