The purchaser's rights to 'cool off' are set out in Part B of the Form 1 [Land and Business (Sale and Conveyancing) Regulations 2010 Schedule 1].
The cooling off period expires at the end of the second clear business day from the day on which the Form 1 is served on the purchaser. The two business days does not include weekends or public holidays, nor the day on which the Form 1 is served.
The purchaser has the right to cancel the contract during the cooling off period by serving notice on the vendor by writing to the vendor or agent stating that he or she does not wish to be bound by the contract. No reason has to be given. The notice can be given to the vendor or their land agent in person, or by leaving it for the land agent at their place of business. Notice can also be given by posting it to the vendor's address via registered mail, or by faxing it to either the vendor or their agent. The time at which the notice was sent is taken to be the time at which the notice is given when determining if it was given within the 2 day limit.
A cooling off notice may also be given by email. It is very important to keep a copy of the cooling off notice and evidence that it was sent. In the event of a dispute about whether notice was given, the purchaser has the onus of proof.
This right should always be exercised if, at any time after signing the contract, the purchaser has any doubts about the purchase.
There is no cooling off period if the property is bought at auction. Care should be taken to view the Form 1 prior to auction to ensure that there is nothing unexpected about the property.
If a purchaser does cancel the contract within the 2 day cooling off period, any deposit paid of more than $100 must be refunded.
From 1 January 2014, bodies corporate (companies) that purchase residential land will be able to exercise the right to cool off. Residential land confined to land where there are up to 2 places of residence, or vacant land on which a residence can be lawfully constructed, or a single community lot or strata unit for residential purposes, but not land greater than 2.5 hectares. The provision is designed to protect small companies who purchase property for investment purposes.
During the cooling off period
The cooling off period is designed to give a purchaser an opportunity to get any building inspections or other assessments done on the property, as well as given some time to rationally and calmly consider the location and suitability of the property for the purchaser’s needs.
However, the cooling off period is insufficient time to obtain finance for the purchase, and it is always wise to carry out any investigations before making an offer, or if there is any doubt, make the contract subject to a satisfactory building inspection or obtaining finance. See:Special Conditions.
Waiving cooling off rights
Sometimes the vendor or their agent will want a purchaser to waive their cooling off rights as a condition of the sale. This will usually be the case where an offer is made prior to auction for a property scheduled for auction. As a purchaser it is important to understand that waiving the right to cool off will mean that the purchaser will not have a chance to conduct a building inspection or arrange finance for the purchase during the cooling off period. A purchaser will also not be able to rescind or cancel the contract simply because of a change of mind.
To waive cooling off rights a purchaser needs to obtain a certificate from a solicitor which states that they have advised the purchaser about the ramifications of waiving the cooling off period. Therefore, if the purchaser is asked to waive cooling off rights, a purchaser will need to arrange to see a solicitor in order to meet this requirement.
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