In Victoria, Section 31 of the Sale of Land Act 1962 grants property buyers a cooling off period. They have 3 business days to change mind and withdraw the contract of sale for the purchase of land. The first day of the cooling off period starts the first business day after the buyer signs the contract. It does not matter if the Vendor has not signed on the same day and only signs a day or two after you as the buyer does.
If the Vendor has not signed the contract yet, you can otherwise simply withdraw your offer before it is accepted, which is different to cooling off, but gives you the same result, putting an end to the contract before it has even begun.
How to Cool off
If you decide you no longer want to purchase the property, you can cool-off by giving notice to the seller, thus cancelling the contract. You will be entitled to a refund of any money paid less $100 or 0.2% of the purchase price, whichever is higher. You must ensure that the Vendor receives this notice within the 3 business days. Usually, you or your solicitor will provide this notice to the Vendor’s solicitor
The 3-day cooling-off period does not apply if:
• you bought the property at a publicly advertised auction or on the day on which the auction was held.
• you bought the land within 3 clear business days before a publicly advertised auction was to be held.
• you bought the land within 3 clear business days after a publicly advertised auction was held.
• the property is used primarily for industrial or commercial purposes.
• the property is more than 20 hectares in size and is used primarily for farming.
• you and the vendor previously signed a contract for the sale of the same land in substantially the same terms.
• you are an estate agent or a corporate body.
Can you still break contract after the cooling off period has ended?
Yes, but only under some conditions can you end the contract. An example of such condition is the ‘subject to finance’ clause if your finance is not approved within a specific time frame. This needs to be specifically agreed before you sign the contract, that your offer to buy is subject to you obtaining finance, and you must make an honest attempt to obtain finance. This isn’t cooling off though. This also applies where the contract is subject to the condition that there are no major defects or infestations in a Building and Pest Inspection, but again you must agree to the contract being subject to such a condition prior to signing the contract.
Does the Vendor have a cooling off period?
No, the rights granted under the Act do not protect the vendor. However, this does not prevent a vendor from having special conditions outlined in the contract allowing them such right, so as a buyer you should carefully read the contract before signing, and have it reviewed by a Solicitor.
Some ways to use the cooling off period.
Some use it as a grace period before their loan get approved, if the Vendor does not agree to the contract being subject to Finance approval.
But do you know that you can use your cooling off period in a different way such as, check building and pest inspection, negotiate property selling amount, check neighbourhood, check area for flood or fire risk and the list goes on. (You can checkout our Purchaser Checklist for more information)
But remember using the cooling off option does come at a cost, and as property prices increase so does the cost of cooling off.
Its always good to take a moment and think before making a big decision, use your cooling off period well.