Recently we were contacted and asked about the cooling off period when purchasing a home. This client of ours, had purchased a property, and wanted our opinion on the viability to renovating the house for profit and was a little unsure of the complexities of the contract. As we are builders, we didn’t have a huge understanding on the cooling off period on a standard homebuyer’s contract, but our friends at McGrath were able to help.
The Cooling-Off Period: Preventing Buyer’s Remorse
The decision to buy a home is not one to be taken lightly, and there is a long list of factors to carefully consider when savvy homebuyers find real estate for sale. Every piece of information that you can gather about a property before the purchase is finalized could dramatically change the prospects of the deal, and the cooling-off period is intended to give the buyer ample opportunity to consider the purchase from all possible angles.
The official cooling off period begins the minute the purchase agreement is signed by the buyer and lasts until 5pm on the next day in most cases. Sundays, public holidays and bank holidays are all excluded from the duration of the cooling off period, meaning that purchases made on the weekend as well as the day before an official holiday present an added advantage for the meticulous home shopper.
Cooling off periods are also extended on an individual basis with the consent of both parties to the longer delay before finalization. This extension must be written and signed in order to be valid, and may be specified in the purchase agreement beforehand or established in a separate addendum to the agreement specifying the conditions of the extended cooling-off period.
Home purchases in the majority of Australia are covered under cooling-off period guidelines, the exceptions being transactions in Tasmania and Western Australia. Homes and properties purchased through a sanctioned auction are also excluded from the cooling-off period, and purchases made at auction take effect immediately unless otherwise stated. Buyers can also elect to waive their right to a cooling-off period in the interest of a speedy closing process.
The rescission process enables buyers to renege on a purchase agreement during the closing out period, and is commonly the only means of backing out without penalty. It starts with an official notice of rescission served to the seller or their representative party, and the effect of rescission is a total voiding of the agreement.
With rescission, any documents relating to the sale of the property are considered for legal purposes to be invalid retroactive to the time of signing. The buyers will no longer be responsible for any fees or damages stemming from the invalidated property agreement, and any funds that have been paid toward purchase must be returned to the buyer as soon as possible.
In most scenarios, backing out of a property purchase once agreed to results in penalties being assessed to the former buyer, but the cooling-off period provides a final window in which to consider the investment. Limited cooling off periods help provide peace of mind for both buyer and seller by ensuring property purchases are made with confidence.
Please be aware, that cooling off periods do vary from state to state, for example the cooling off period in Queensland is 5 days, not one. Please seek professional advice prior to signing your contract.
Were you aware of the cooling off period when purchasing your home? Is this information helpful for you ?
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