Guide

Cooling off, and when there is none

The cooling-off period is the one safety net in a residential purchase. It is also the one most often removed, sometimes by the vendor’s request and sometimes by the simple fact of bidding at an auction.

General information, not legal advice. This page sets out how the law generally applies. It does not take account of your circumstances, and you should get advice about your own situation before acting on it. The official sources this page is written from are listed on it; where they differ from anything here, they are the authority.

In short

A cooling-off period applies to many residential purchases in New South Wales under the Conveyancing Act 1919 (NSW). It does not apply where you buy at auction, and it can be waived by a certificate under section 66W of that Act.

Using a cooling-off right is not free: a proportion of the purchase price is forfeited to the vendor. The length of the period and the amount forfeited are set by the legislation, so check them for your contract rather than working from a number on a website.

What the cooling-off period is for

Residential property is bought under pressure. An agent wants the contract signed, another buyer is apparently interested, and the decision is often made in a day. The cooling-off period exists to put a short gap between that moment and the point at which you are finally committed.

It works in one direction. A buyer who cools off can end the contract. The vendor cannot. Once contracts are exchanged the vendor is bound, which is part of why exchange matters so much and why some vendors push to have cooling off removed.

The period runs from exchange, and the contract must carry a statement of the purchaser’s cooling-off rights in the prescribed form. If you are buying, read that statement. It is attached to the contract for exactly this reason.

Cooling off is a residential protection. Whether it applies to the particular transaction in front of you depends on the property and the contract, so it is a question to ask about your own purchase rather than to assume.

The two ways it disappears

The first is the auction. There is no cooling-off period when you buy a property at auction. If you are the highest bidder you sign and exchange on the spot and you pay the deposit then. The same applies where a property is passed in and contracts are exchanged on the same day.

That is the single most important thing to understand about bidding. Everything you would otherwise do during a cooling-off period — read the contract properly, finalise your finance, get a building and pest inspection, obtain a strata report — has to be finished before you raise your hand. There is no afterwards.

The second is waiver. A vendor may ask you to waive the cooling-off period by giving a certificate under section 66W of the Conveyancing Act 1919 (NSW), signed by your solicitor or licensed conveyancer, who has explained the effect of giving it up. In a competitive market a vendor may make acceptance of your offer conditional on that certificate.

The period can also be shortened or extended by written agreement between the parties, which is occasionally a useful middle path where a vendor wants certainty and you want a few more days.

Buying at auction: no cooling-off period, on the day or where contracts are exchanged the same day after a pass-in.
Waiver by a section 66W certificate: the period is given up, and the certificate is signed by your own solicitor or conveyancer.
Agreement to shorten or extend: written, between the parties, and worth asking for where the alternative is outright waiver.
Certain contracts and transactions are outside the cooling-off regime altogether. Whether yours is one of them is a question about your contract.

What it costs to use it

Cooling off is a right to end the contract, not a right to change your mind for free. A purchaser who rescinds during the cooling-off period forfeits a proportion of the purchase price to the vendor. The proportion is set by the legislation.

That figure is worth knowing before you rely on the period as a safety net, because on a property of any size it is a real sum. It is also the reason cooling off should not be treated as a substitute for doing the work properly beforehand. It is an exit, and it has a price.

The notice ending the contract has to be given in the way the legislation and the contract require, and within the period. A late notice is not a notice. If you are considering it, ring on the day you start considering it rather than the day before the period ends.

This page does not print the length of the period or the proportion forfeited. Both are set by legislation and both are checkable at the source. A figure copied onto a website and left there is exactly the kind of thing that costs somebody their contract.

Off-the-plan contracts are treated differently

A longer cooling-off period applies to an off-the-plan residential contract than to the purchase of a completed home. The reason is obvious once stated: you cannot inspect what does not exist, and the documents take longer to read.

It can still be waived by a section 66W certificate, and the same forfeiture applies if the right is used. Off-the-plan contracts also carry their own, separate rescission rights where the required disclosure documents are missing or where something disclosed later changes in a material particular. Those are not the same thing as cooling off, and they run on their own periods.

Our guide to off-the-plan contracts sets out the disclosure statement, the sunset clause restrictions and what a notice of change means.

What to do with the time, if you have it

If a cooling-off period does apply, treat it as working time rather than thinking time. It is short.

Finance is usually the priority. If your approval is conditional, or if the valuation has not been done, that is the thing most likely to go wrong after the period ends, and after it ends you are committed whether or not the money arrives.

The building and pest inspection comes next, and for a unit the strata report. If either turns up something serious, the cooling-off period is the window in which the discovery is still useful.

And the contract itself, if it has not already been read. Anything you want changed has to be raised now, although a vendor who has already exchanged has less reason to agree to anything.

Confirm your finance is unconditional, not pre-approved.
Complete the building and pest inspection.
Obtain and read the strata report, if it is a unit or a townhouse in a scheme.
Check that the prescribed documents were actually attached to the contract.
Raise anything in the contract you still want changed, and get the answer in writing.

If you are selling

From the vendor’s side, the cooling-off period is a gap between exchange and certainty. Your buyer can withdraw during it; you cannot. That is why vendors are often advised to ask for a section 66W certificate, and why auction campaigns are attractive in a strong market.

It is a negotiating position rather than a requirement. A buyer who will not waive is not necessarily a weak buyer, and insisting on waiver can narrow the field. Whether to ask for it is a commercial decision, made with your agent and with advice about what it actually protects you from.

Whatever is agreed, the contract must still carry the prescribed statement of the purchaser’s cooling-off rights, and the prescribed documents still have to be attached before the property is offered. Waiver does not shorten the vendor’s own obligations. Our page on residential sale sets those out.

What usually happens

Find out whether a period applies at all

It depends on the property, the contract and whether the sale is by auction. The contract carries a statement of cooling-off rights in the prescribed form, and it is the first place to look.

If it is an auction, finish everything beforehand

Contract review, finance, building and pest, strata report. There is no cooling off after the hammer falls, and a successful bidder signs and pays the deposit on the spot.

If you are asked to waive, get advice before you agree

A section 66W certificate is signed by your own solicitor or conveyancer after the effect has been explained to you. That conversation is the protection. Do not have it in the agent’s office in five minutes.

Use the period, if you have one

Finance first, then the inspections, then anything outstanding in the contract. The period is short and it is the last point at which a discovery is still useful.

If you need to withdraw, act immediately

Notice must be given in the required way and within the period, and a proportion of the price is forfeited. A day’s delay can remove the right altogether.

Common questions

How long is the cooling-off period?

It is set by the Conveyancing Act 1919 (NSW), it is measured in business days from exchange, and it is longer for an off-the-plan contract than for a completed home. This guide does not print the number, because a figure on a website that has quietly gone out of date is how somebody misses a deadline. The NSW Government’s page on contracts and deposits carries the current period, and we will confirm it for your contract.

Is there really no cooling off at an auction?

Correct. There is no cooling-off period when you buy at auction. The successful bidder signs and exchanges immediately and pays the deposit. It also does not revive if the property is passed in and contracts are exchanged the same day.

What is a 66W certificate?

A certificate under section 66W of the Conveyancing Act 1919 (NSW) by which a purchaser waives the cooling-off period. It is signed by your solicitor or licensed conveyancer, who must have explained the effect of giving the right up. Vendors ask for them frequently, particularly where there are competing offers.

Should I give a 66W certificate?

It depends on how complete your preparation is. If the contract has been reviewed, your finance is genuinely unconditional and the inspections are done, waiver costs you little. If any of those is outstanding, you are giving up the only exit you have. It is your decision and it should be made with advice, not under pressure at the moment of signing.

What does it cost to cool off?

A proportion of the purchase price is forfeited to the vendor, set by the legislation. On a property of any value that is a meaningful amount, which is why cooling off is best thought of as an exit with a price rather than a free trial.

Can the vendor cool off?

No. The cooling-off period protects the purchaser. Once contracts are exchanged the vendor is bound, subject to whatever the contract itself provides.

Can the period be extended?

It can be shortened or extended by written agreement between the parties. Where a vendor is pressing for a waiver and you need a few more days for finance, asking for an extension instead is sometimes a workable middle path.

I have exchanged and I think a document was missing from the contract. Is that cooling off?

No, it is a different right. Where a prescribed document is not attached, the purchaser may be entitled to rescind under the disclosure provisions, within a period set by the legislation and running from exchange. It is separate from cooling off and it also expires quickly. Raise it the same day you notice it.

Being asked to waive?

A section 66W certificate has to be signed by your own solicitor or conveyancer after the effect is explained to you. If a vendor has asked for one, send us the contract and we will tell you what you would be giving up.