In this blog/video, we explain why if you're thinking of relying on the Cooling-Off Period in QLD property contracts, that could backfire, fast!
Many buyers assume the five business day cooling-off period is a no-strings trial window. Sign now, do checks later, walk away if needed. But the reality? It’s a legal safety net with strings — and consequences.
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Hi everybody - George Sourris, Empire Legal.
Today's topic: Gold Coast sellers are getting fined for this simple contract mistake…are you next?
The cooling-off period in Queensland residential contracts is one of the most misunderstood concepts in conveyancing. Buyers often treat it as a no obligation trial period - sign the contract now, check things later, and walk away if needed.
But the reality is it's far more complex, and if you're not careful, relying on the cooling-off period could cost you thousands - or worse, put you in breach of contract. Let's break down the legal mechanics, the commercial risks and the real world implications of relying too heavily on this short, sharp timeframe.
What does the law say? Under Section 166 of the Property Occupations Act 2014, a buyer who enters into a contract for the sale of residential property, that is not a sale at auction, is entitled to a five business day cooling-off period, beginning the day they or their lawyer receives a signed copy of the contract.
This statutory right gives the buyer the ability to terminate for any reason within that timeframe. However, and this is where most buyers go wrong, the law also permits the seller to retain 0.25% of the purchase price if the buyer terminates during this period. So yes, you can change your mind, but no, it's not for free.
Calculating the penalty. The termination penalty isn't minor, especially in today's property market. Here's how the 0.25% fee plays out. Contract price - $1.2 million, termination penalty - $3,000. Even if you terminate on day one, before finance approval or building reports, the penalty still applies in full if you terminate under cooling-off, and it's deducted from your deposit.
Three technical risks most buyers miss.
Number 1- waiving or shortening of cooling-off rights.
Buyers may inadvertently waive their cooling-off rights by: signing a cooling-off waiver form that is attached to the contract, or signing a contract prepared before auction. Cooling-off does not apply to auction sales or post auction contracts entered into within two business days. Even in private treaty sales, sellers or agents may pressure a buyer to sign a waiver or shorten the cooling-off window as part of negotiations, especially in competitive markets. Once waived or shortened, the cooling-off right is gone. There is no reinstatement.
Number 2 - cooling-off does not equal finance condition.
This is a critical distinction. The cooling-off period is not a substitute for a finance condition. If your contract is not subject to finance and you fail to obtain lending approval after the cooling-off period expires, guess what? You cannot simply terminate and walk away. You're bound to complete the contract and may face termination, forfeiture of deposit, and even damages for breaches if you don't settle.
We always advise buyers to ensure proper conditions - finance, building and pest, et cetera, are included before signing if they are required by that particular client for their needs.
Number 3 - relying on the cooling-off period for your due diligence.
Big mistake. Some buyers believe they can use the cooling-off period to order a building and pest report, check body corporate records, review zoning, flood overlays, easements, or review a CMS or disclosure statement. But, five business days often is not enough, especially if the seller delays returning the executed contract, or if key searches take longer than expected.
Worse, once the cooling-off period ends, your right to terminate disappears, unless you're relying on another condition or you can prove misrepresentation or breach. But I wouldn't be relying on any of that.
Now, a note on procedure termination - it must be valid.
Cooling-off terminations must: be in writing, be delivered to the seller or their solicitor before the deadline, and clearly state the buyer is terminating under Section 166 of the Property Occupations Act.
If the notice is late or sent to the wrong person, the contract may remain on foot, and the buyer could be held liable for non settlement. Empire's top tips for buyers. Don't rely on the cooling-off period as your plan A, treat it as your last resort, not your first safety net. Always get legal advice before signing - we can review for waivers, special conditions and timing risks. Be strategic with conditions, especially finance, building and pest, and due diligence clauses. And if you must terminate, make sure you do it properly and within the timeframe.
The final word. In theory, the cooling-off period exists to protect buyers. In practice, it's limited, misunderstood, and should be treated as an absolute last resort.
At Empire Legal, we review Queensland contracts every single day, and we've seen firsthand how assumptions around the cooling-off period can lead to financial losses, litigation, or missed opportunities. Our advice - don't treat it like a backup plan, treat it like the high stakes window it really is.
Well, guys, there you go. cooling-off period. Again, it's a statutory right, unless it's waived or shortened, shy of those auction example that we gave above!
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Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Brisbane, Queensland, Australia.
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Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.