The cooling-off period in NSW and when to waive it

How the cooling-off period works

1. It starts when contracts are exchanged.
2. It ends at 5pm on the fifth business day.
3. Only the buyer has a cooling-off period. The seller does not.
4. For an off-the-plan residential contract, the period is 10 business days.

The period can be shortened or extended by written agreement between the buyer and the seller.

Withdrawing in the cooling-off period

To withdraw, you must give written notice before the period ends. It is usually given to the seller's agent, solicitor or conveyancer.

You then forfeit 0.25% of the purchase price to the seller. That is $250 for every $100,000 of the price.

The amount is taken from your deposit. If the deposit paid is not enough, you must pay the difference.

Withdrawal must be done properly and on time. If it is late, or not in writing, you may still be bound.

When there is no cooling-off period

There is no cooling-off period when:

1. You buy at auction.
2. You exchange on the same day as the auction, after the property is passed in.
3. You give the seller a 66W certificate.

At auction, once the hammer falls and you are the highest bidder, you must sign and exchange.

How a waiver is given

The cooling-off period is waived with a certificate under section 66W of the Conveyancing Act 1919.

It must be signed by your own solicitor. It cannot be signed by a solicitor acting for the seller, or by a solicitor in the same firm as the seller's solicitor.

Before signing it, your solicitor must explain to you the effect of the contract, the nature of the certificate, and what it means to give it to the seller.

Once it is given, you are bound on exchange.

When waiving may make sense

A seller may ask for a waiver, or you may offer one to make your offer stronger.

A waiver can make sense when each of these is true:

1. Your solicitor has reviewed the contract and you understand it.
2. Your finance is approved, not only pre-approved, for this property.
3. Your building and pest inspections are done, and strata records are checked for a unit.
4. You have the full deposit ready on the day of exchange.

If any of these is not done, a waiver means you carry that risk with no right to withdraw.

Using the period well

The cooling-off period is short.

If you plan to use it for inspections or finance, book the inspector early. Inspectors usually need 2 to 3 days' notice.

Tell your lender the exchange date in advance.

Diary the exact end time: 5pm on the fifth business day.

Where buyers get caught

Waiving before finance is approved.

If your loan is later refused, you are still bound to complete the purchase.

Relying on an inspection that will not be ready in time.

A report that arrives after the period ends gives you no right to withdraw.

Counting days wrongly.

The period counts business days, not calendar days, and it ends at 5pm.

Giving notice by phone.

Withdrawal must be in writing. A phone call to the agent is not enough.

Common questions