Buying a House Cooling Off Period

Purchasing a home is one of the biggest financial decisions most people will make in their lifetime. In Melbourne and throughout Victoria, buyers have an important protection called the "cooling off period" that allows them to reconsider their decision after signing a contract. This blog post will explain everything you need to know about the cooling-off period when buying property in Melbourne.

What is the cooling off period?

The cooling-off period is a short window of time after signing a contract to purchase property during which the buyer can change their mind and withdraw from the sale without major consequences. It's designed to protect buyers and give them time to fully consider their decision.In Victoria, the cooling-off period is 3 business days for most residential property sales. It begins from the day the buyer signs the contract, not from when the seller signs.

When does the cooling off period apply?

The 3-day cooling-off period applies to most private sales of residential property in Victoria. However, there are some important exceptions where cooling-off rights do not apply:

• Properties purchased at public auction or within 3 business days before or after a public auction
• Commercial or industrial properties
• Rural properties over 20 hectares
• If the buyer is an estate agent or corporate body
• If the buyer has previously signed a contract for the same property with similar terms

It's crucial to confirm with your conveyancer whether cooling-off rights apply to your specific situation before signing any contracts.

Why might someone use the cooling off period?

There are several reasons why a buyer may choose to exercise their cooling-off rights:

• Building and pest inspections reveal unexpected issues
• Finance approval falls through
• Another more suitable property becomes available
• New information comes to light that changes the buyer's mind
• The buyer's financial situation changes unexpectedly

While the cooling-off period provides an important safeguard, it's always preferable to conduct thorough due diligence before signing a contract rather than relying on cooling-off rights.

How to exercise your cooling off rights

If you decide to withdraw from the contract during the cooling-off period, you must provide written notice to the seller or their agent before the period expires. This is typically done through your conveyancer or solicitor. The notice must be delivered before 5pm on the final day of the cooling-off period. Weekends and public holidays are not counted as business days.

Financial implications of cooling off

While cooling off allows you to withdraw from the contract, there is a financial cost. In Victoria, the seller is entitled to keep 0.2% of the purchase price or $100, whichever is greater. For example, on a $1 million property, you would forfeit $2,000 if you cool off. While this is not insignificant, it's far less than you would lose by proceeding with an unsuitable purchase.

Waiving your cooling off rights

In some cases, buyers may choose to waive their cooling-off rights, typically to make their offer more attractive to the seller. This creates an unconditional contract. However, waiving cooling-off rights is risky and should only be done after careful consideration and professional advice. Once waived, you cannot change your mind without potentially serious financial and legal consequences.

Tips for buyers

To avoid needing to use the cooling-off period:

• Thoroughly inspect the property before making an offer
• Obtain finance pre-approval
• Have a professional review the contract and Section 32 statement
• Conduct building and pest inspections prior to signing if possible
• Research the neighbourhood and any planned developments
• Consider your long-term needs and financial situation

Conclusion

The cooling off period provides important protection for property buyers in Melbourne, but it should be viewed as a last resort rather than a standard part of the purchasing process. Thorough research and professional advice are always the best ways to ensure you're making the right decision when buying a home.

For expert guidance on property contracts and conveyancing in Melbourne, contact Pearson Chambers Conveyancing. We offer a free Section 32 contract review to help you understand your rights and obligations before signing. Get in touch today:

Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au