When you are selling or buying a home, there’s often a clause called the “cooling off period” in the contract. Here’s what you need to know.
What does the cooling off period mean?
The cooling off period helps protect the purchaser of the home. It gives them the opportunity to rescind on the signed agreement without losing their total deposit.
There is a 0.25 per cent penalty for doing so, however the rest of the deposit will be refunded to the buyer.
Usually, they will use this time to try and line up unconditional finance arrangements and sorting out any final inspections required.
How long is the cooling off period?
The purchaser of the home is usually entitled to a set number of days during which they can rescind from the sale. Usually, the cooling off period is from two to five days (up until 5pm) from the time of the accepted written offer, however this varies from state to state.
Be aware that public holidays can affect the cooling off period and that in some states cooling off periods are not standard.
Can the cooling off period be changed?
The buyer may wish to extend their cooling off period, however the seller has every right to refuse this. They may also wish to waive their right to a cooling off period altogether or you can request this. They can also refuse these arrangements.
A cooling off period also does not exist in an auction situation – and usually the afternoon following the auction.
Most sellers will be comfortable with allowing the buyer their full cooling off period, particularly as it is only a few days and is often the norm.
A written notice is usually to cancel the contract during the cooling off period. After this, the balance of the deposit, minus the penalty, should be refunded to the buyer.
What else should I know?
It’s worth discussing the cooling off period with your real estate agent closely, who can tell you what is most likely to happen.
Having no cooling off period can provide the seller with some certainty, however it may deter a motivated buyer.