Lot 4 of 6 · After exchange
Cooling-off in NSW
A buyer of residential property in NSW usually has a cooling-off period of 5 business days after contracts are exchanged, ending at 5pm on the fifth business day; for a property bought off the plan it is 10 business days. A buyer who pulls out in that time pays the seller 0.25% of the price. There is no cooling-off at all for a buyer at auction, or for one who exchanges contracts on the same day as the auction after the property is passed in.
How the five days run
The period starts as soon as contracts are exchanged. NSW Fair Trading’s own example: exchange at 10am on a Tuesday, and the cooling-off period ends at 5pm on the Tuesday of the following week. Drawn out, that week looks like this.
Drawn from the example on NSW Fair Trading’s contracts and deposits page.
To get out of the contract in that time, the buyer gives written notice. Only the buyer has this right: there is no cooling-off period for sellers, who must go ahead once contracts are exchanged. Fair Trading notes that the period is when a buyer can still do a building and pest inspection and have the contract examined.
When it applies, and when it does not
| How the property is bought | Cooling-off | What NSW Fair Trading says |
|---|---|---|
| Private sale, after exchange | 5 business days | Runs from the moment of exchange and closes at 5pm on business day five, counted from the day after exchange. |
| Off the plan | 10 business days | Longer because these contracts are often large and complex; pulling out still costs 0.25% of the price. |
| At auction | None | The successful bidder signs the contract and pays the deposit on the spot. |
| Passed in, exchanged the same day | None | Contracts exchanged on the auction day after the property is passed in carry no cooling-off period. |
What pulling out costs
A buyer who rescinds during the cooling-off period pays the seller 0.25% of the purchase price, which Fair Trading puts as $250 for every $100,000. It comes out of the deposit paid under the contract, and if the deposit is not enough, the buyer makes up the difference.
- Price of a house in a private sale
- $900,000
- 0.25% of that price
- $2,250
- Price of an apartment bought off the plan
- $1,500,000
- 0.25% of that price
- $3,750
Both follow Fair Trading’s rule of $250 for every $100,000: 9 × $250 and 15 × $250.
Waiving, shortening or extending it
A buyer can waive the cooling-off period by giving the seller a “66W certificate”, and the period can also be reduced or extended by written agreement with the seller. Fair Trading’s page adds that advice should always be sought before waiving it. Only the buyer can waive it.
Off the plan, the rule is tighter: the period can be waived or shortened only if the buyer’s lawyer or conveyancer provides the certificate the law requires and explains the contract and the consequences of changing the period.
The contract itself has to carry the prescribed statement about the cooling-off period.
Where the agents fit
Exchange is the point the cooling-off clock starts from, and it is usually arranged by the buyer’s solicitor, conveyancer or the agent. When an agent arranges the exchange, they must give copies of the signed contract to each party, or to their solicitor or conveyancer, within 2 business days. If a client has told the agent, or the contract shows, that a solicitor or conveyancer is acting for them, the agent may not take part in the exchange without express authorisation.
Before exchange, an expression of interest deposit is a different thing. It does not hold the property or take it off the market, it is refundable, and the seller can keep negotiating with other buyers. A buyer’s agent paying one on a buyer’s behalf must first explain all of that in writing. The buyer’s agent lot sets out that duty.