When you purchase residential property in NSW you generally have a “cooling off period” which is a period of 5 business days during which you can change your mind for any reason and pull out of the purchase. If you decide to exercise your cooling off rights and pull out of the purchase, you forfeit 0.25% of the purchase price. For example, if you entered a contract to purchase a house for:
$800,000.00 you would lose $2,000.00
$500,000.00 you would lose $1,250.00
For “off-the-plan” contracts the cooling off period is 10 business days.
If the property is a commercial property, vacant land not intended for the development of a residential house or any property which is greater than 2.5 hectares in area it is not considered residential property a cooling off period does not apply.
You do not have a cooling off period if you purchase a residential property at auction or if you instruct your solicitor to sign a section 66W certificate waiving your right to a cooling off period.
The question about whether an auction has taken place might seem straight forward but there have been various cases where this is not clear as in the case of
Ma v Francis  NSWSC 1224 –
The Vendor intended to sell her property by auction, but on the day of the auction there was only 1 registered bidder. The agent and the auctioneer took the registered bidder aside to try to reach a private agreement. While those negotiations were taking place, the auctioneer made a few announcements – but never opened the auction to bidding. The registered bidder signed a contract and paid a deposit.
During the cooling off period the purchaser served a notice of rescission. The vendor contended that there was no cooling off period as the property was sold at auction after the property was passed in. The court found that the auction never commenced therefore auction conditions did not apply and the purchaser was entitled to cooling off rights.
If you have any questions about “cooling off periods”, please do not hesitate to contact us.