The Cooling Off Period Explained
As part of consumer protection laws, buyers purchasing residential property in Queensland are entitled to cooling off period, which allows the buyer to
terminate the contract. Below are a couple of common questions and answers regarding this:
A seller is not entitled to a cooling off period, only a buyer.
2. When and how long?
The buyer is entitled to five (5) business days to terminate the contract. The first day is the first business day the buyer or their solicitor receives
a copy of the contract signed by all parties. The last day is 5pm on the fifth business day.
For example, the buyer receives an email from the real estate agent with the fully signed contract at 6pm Monday (this is the first day), and the cooling
off period ends at 5pm on Friday. The buyer receives a copy of the contract on Saturday at 3pm, the first day is Monday and the cooling off period
ends at 5pm on Friday.
The buyer does not need to give a reason to terminate the contract. In order to terminate the buyer should notify the seller in writing. Best practice
is for the buyer’s solicitors to send correspondence to the seller’s solicitor.
If the buyer does terminate using the cooling off period, the seller is entitled to deduct 0.25% of the purchase price from the deposit paid as a penalty.
For example, if the purchase price is $350,000.00, then the termination penalty is $875.00.
The seller should confirm with their real estate agent as typically in their listing agreement with the agent this penalty maybe shared with the agent.
5. All contracts?
The cooling off period is only for buyers of residential property. It does not apply to:
- Residential properties purchased at auction;
- A primary production property, commercial or industrial property that also does have a house on the property, if the primary purpose is not residential.
There are some other situations where a cooling off period does not apply, which are infrequent.
A real estate agent, or the seller may, in certain circumstances, request that the buyer waives or shortens this cooling off period. This may occur in
a situation of multiple offers or sellers requesting a quick settlement.