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Cooling Off Period - Melbourne Victoria FAQA purchaser of real estate in Victoria is entitled to "cool off" within 3 days of signing a contract, subject to certain conditions. On this page we will examine the cooling off right, demonstrate why cooling off is always a poor option, and explain the correct way to cool off.
URGENT: Cool off NOW!If you need to cool off urgently, purchase our DIY Cooling Off Kit now at www.RealEstateDocuments.com.au by clicking on the following icon:
What is "cooling off"According to Section 31 of the Sale of Land Act a purchaser who signs a contract or contract note for the purchase of real estate can terminate the contract within 3 clear business days from the day the purchaser signed it.The sale must be for land other than land used primarily for commercial or industrial purposes, and land larger than 20 hectares used primarily for farming. In addition to these restrictions, there is no cooling off right if:
STAY SAFE... What's wrong with "cooling off"Cooling off happens after the eventThe need to cool off indicates that there is trouble; the purchaser is in "hot water" and needs to cool off. Now, wouldn't it be better to avoid getting into hot water in the first place?The point to be made here is that cooling off is not an option that any purchaser should consider using. Cooling off is a last resort, to be used when the purchaser realises that a mistake has been made. A purchaser who knowlingly accepts risks by signing a contract without properly investigating the matter is as foolish as the swimmer who dives into muddy water without first checking the depth. Cooling off can be manipulatedWe regularly receive complaints from clients who have been misled by estate agents who know how to use the cooling off provisions against purchasers. Here are some examples:
Cooling off costs moneyCooling off is an inconvenience to the vendor. After all, the vendor has been told that the property is sold and now finds that the sale has collapsed. Whether it is a form of compensation for the vendor, or something of a deterrent to stop frivolous cooling off, the fact is that a purchaser who cools off must pay $100 or 0.2% of the purchase price, whichever is the greater amount.ConclusionCooling off should never be relied upon as a safety measure. Cooling off is of no value to a purchaser other than as a last resort where a purchase has been impulsive, made as the result of a mistaken belief, or has been poorly researched. It should never be relied upon as an alternative to the obtaining of sound legal advice, and thorough checking and research.NOTE: Cooling off is a first-aid kit, it is not a safety measure!
STAY SAFE... Avoiding the need to "cool off"Have the property checkedA purchaser can avoid having to rely on the cooling off period by properly inspecting and checking the property before buying.The rule caveat emptor (Buyer Beware) applies in real estate sales, and it is important that the purchaser investigates all quality matters and legal issues. (For details on what to look for and what to watch out for, read through our pre-purchase information email, available from our Pre-Purchase Assistance For Purchasers page.) The best way to have the property checked is to engage professionals to do it. Sure, it costs money to have professionals involved, but they do have the expertise, the equipment, and the insurance to allow them to carry the responsibility. (But be aware of any disclaimers or limitations to that responsibility.) Examples of the types of services available can be found at: The expert on most matters will be YOU, the purchaser. Some things a purchaser may want to consider:
Have the Section 32 Vendors Statement checkedOf course we're going to suggest that a purchaser should have us check the Section 32 vendors statement and contract before signing; after all, it's one of the services we offer. But seriously, we do offer this service for a very good reason, and our clients' testimonials support this.Having the Section 32 vendors statement checked before purchase provides the purchaser with information about its contents, but even more importantly the purchaser is able to discover what should be in the statement, but is not. Have the contract checked by a lawyerThere have been numerous occasions where we have advised clients against making a purchase, the most outrageous being the inclusion of a special condition in an auction contract which requiried the purchaser to assume responsibility for an on-going 2 year legal battle over a non-existent carpark in a block of units!Real estate contracts are ALWAYS prepared in favour of the vendor, and are more or less imposed on the purchaser by the estate agent. The role of the lawyer is to interpret the conditions of the contract, particularly the Special Conditions, and to advise the purchaser. An unfair contract can be "evened up" so that the purchaser's needs are accommodated. Vendors will usually concede matters if it may make the difference between sale or no sale. And this is how real estate sales are properly negotiated.
STAY SAFE... How to "cool off"The process of cooling off is not difficult. Section 31(3) Sale of Land Act requires that the vendor must be given notice that the purchaser wishes to terminate the contract.The notice must be in writing, and it must be delivered to the vendor or the vendor's agent or solicitor. This means that a hand-written letter will be sufficient to end the contract. NOTE: What if the party receiving the notice is dishonest, and denies having received it? This is where things can become difficult, and evidentiary problems arise. If you are thinking about cooling off, contact us for personal advice on how to effectively serve notice in your particular circumstances.
STAY SAFE... If it's too late to "cool off"If the cooling off period has expired a purchaser cannot rely on it as a way out of the contract. However, there may be other options available:
NOTE: Remember that cooling off is a first-aid kit, it is not a safety measure - don't sign anything without getting legal advice first!
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