By definition a cooling off period is ‘A period of time after a sale contract is agreed during which the buyer can cancel the contract without incurring a penalty’. This is not wholly correct when dealing with Cooling Off Periods involving property in NSW.
Every contract for the sale of residential property has a cooling off period. The cooling off period is five business days for normal transactions and ten business days for Off The Plan purchases. The purchaser may rescind the contract for any reason at any time prior to 5.00pm on the fifth business day after the day on which the contracts were exchanged. A purchaser who rescinds the contract under the cooling off provisions will forfeit to the vendor 0.25% of the purchase price of the property. Any deposit already paid by the purchaser is refunded less the 0.25% forfeited.
There is no cooling off period if the property is purchased at auction, purchased on the same day as the property was offered for auction or if a certificate under s.66W of the Conveyancing Act is signed by the purchaser’s conveyancer and given to the vendor’s conveyancer or agent at or before the time of exchange of the contracts.
A certificate under S66W of the Conveyancing Act is a certificate signed by the purchaser’s conveyancer stating that the contract has been explained to the purchaser by the conveyancer signing the certificate and that the purchaser waives his/her rights under the cooling off provisions of the Conveyancing Act. There is a specific format for this certificate detailed in S66W of the Conveyancing Act.