Everything you need know: COOLING OFF period in Queensland

We explain everything you need to know about the COOLING OFF period when selling a property in Queensland...

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COOLING OFF PERIOD

Here's what you need to know about the cooling off period in Queensland.

What is the Cooling Off Period?

A cooling-off period of 5 business days applies to contracts for the sale of residential property. It starts the day the buyer receives a copy of the contract (signed by all parties).

Note:

• For contracts that arrive on a weekend or a public holiday, the cooling-off period starts on the next business day.
• The cooling-off period still begins if a representative receives the contract on the buyer’s behalf.
• If there’s a dispute, the seller (or their agent) must prove when they delivered the contract.

The cooling-off period ends at 5pm on the final (5th) day of the cooling-off period. After this, the buyer cannot rely on the cooling off provision to terminate. Please note the cooling off period is only available as a benefit to the buyer – the seller cannot terminate under cooling off.

Example - assume the buyer receives a copy of the relevant contract from the seller at any time on a Monday (even after business hours). Assume also that the cooling-off period is not affected by a day that is not a business day. The cooling-off period ends at 5p.m. that Friday.

Exempt sales:

A contract is exempt from the cooling-off period for:

• a sale by auction
• a follow-up sale after an unsuccessful auction (before 5pm on the second business day), in which the buyer was a registered bidder.
• an option contract (or a sale contract formed as the result of an option contract).

Cancelled sales:

To cancel the sale contract, the buyer (or their solicitor) must give written notice by 5pm on the 5th day. If the buyer chooses to cancel during the cooling-off period, the seller:

• may deduct a penalty of up to 0.25% of the purchase price from the Deposit
• will need to refund the rest of the deposit (if applicable) within 14 days.
  

Waived or shortened period:

The buyer can choose to waive or shorten the cooling-off period. They will need to put this in writing. This document will need to state that:

• they waive the cooling-off period in its entirely; or
• the cooling-off period will last until 5pm on a particular day.

A waived cooling off period is attractive for vendors, and we suggest using the appropriate one page document as provided by REIQ – which can be found here:

How to Use the Cooling Off Period:

It's worth noting that the cooling off period is not a negotiating tool. It's designed to allow buyers to reconsider their decision with a small financial penalty. As a Seller’s Agent, it is prudent to collect a reasonable amount for an initial deposit, to at least cover the 0.25% cooling-off penalty for your seller.

For example: on a $1m purchase, 0.25% is $2,500.00. If the initial deposit is less, say $1,000; then only $1,000.00 would be recoverable if the buyer terminates under the statutory cooling off provision.

Conclusion:

The cooling off period in Queensland provides buyers with a valuable safety net when purchasing property. It allows a buyer to back out of the contract without incurring any major penalties or legal repercussions - giving the buyer peace of mind when making one of the biggest purchases of their life.

However, it's important to conduct thorough due diligence before signing any contracts, and not rely on the cooling off period as a negotiating tool. If you're unsure about anything related to the cooling off period or the buying process in general, seek advice from a qualified professional. At Empire Legal, we look after our buyers by providing advices before a contract is signed. For any questions, please get in touch with us.

PS: a special shoutout to Elaine Payne for writing to me to suggest this as a topic to share this week. If you have a topic you would like us to cover, please email me: george@empirelegal.com.au.

For simple, sunny, smooth sailing conveyancing – Empire Legal.

We look forward to continuing to help thousands of Queenslanders every year with their conveyancing!

Any questions? Want to know more? Get in contact with us via the below form or via info@empirelegal.com.au.

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.