Cooling-Off Periods When Buying Residential Property in NSW

Once contracts are exchanged for the purchase of a home in New South Wales, the purchaser may have a short period in which to reconsider the transaction. Understanding when this cooling-off period applies—and what it costs to use it—is important before signing or exchanging a contract.

How long is the cooling-off period?

Under section 66S of the Conveyancing Act 1919 (NSW), most contracts for the sale of residential property carry a cooling-off period. For an ordinary residential contract, the period expires at 5 pm on the fifth business day after the contract was made. For an off-the-plan contract, it expires at 5 pm on the tenth business day after the contract was made.

The vendor may extend the period by a term in the contract or by a separate written statement. Because weekends and public holidays can affect the calculation, purchasers should obtain confirmation of the precise expiry date and time rather than calculate it informally.

Can a purchaser withdraw?

During a valid cooling-off period, the purchaser may rescind the contract by serving written notice in accordance with section 66U. However, rescission is not cost-free. Section 66V provides that the purchaser forfeits 0.25% of the purchase price to the vendor.

For example, on a purchase price of $1,000,000, the statutory amount forfeited would be $2,500. The purchaser is generally entitled to recover any deposit paid above that amount.

When is there no cooling-off period?

There is no statutory cooling-off period for a property bought at auction, or where contracts are exchanged on the same day after an auction at which the property was passed in. A purchaser can also give up the cooling-off protection by providing a certificate under section 66W. That certificate must be signed by an independent legal practitioner or licensed conveyancer who has explained the effect of the contract and the consequences of the certificate.

Vendors sometimes request a section 66W certificate where there are competing offers or where they want immediate certainty. Providing one should not be treated as a formality. Once cooling-off rights have been waived, a purchaser who cannot complete may be in breach of contract and could face consequences extending well beyond the 0.25% cooling-off amount.

What should be checked before exchange?

Before exchanging without cooling-off protection, a purchaser should ordinarily have the contract reviewed, obtain satisfactory finance approval, complete appropriate building, pest and strata investigations, check the title and relevant searches, and understand any unusual conditions. Finance pre-approval may not be the same as final or unconditional loan approval.

A cooling-off period provides limited time, not complete protection from every risk. Early legal advice allows issues to be investigated before the purchaser becomes unconditionally bound.

Sources

Conveyancing Act 1919 (NSW), sections 66S–66W: https://legislation.nsw.gov.au/view/whole/html/inforce/current/act-1919-006

Conveyancing (Sale of Land) Regulation 2022 (NSW): https://legislation.nsw.gov.au/view/whole/html/inforce/current/sl-2022-0485

NSW Government, Contracts and deposits when buying property in NSW: https://www.nsw.gov.au/housing-and-construction/buying-and-selling-property/buying-property-nsw/contracts-and-deposits

This article provides general information only and is not legal advice. Cooling-off rights depend on the property, the method of sale, the contract and the circumstances. Please obtain advice about your particular transaction.