The cooling off period is a statutory right protecting consumers which is embodied in all standard contract of sales. The cooling off period varies depending on the State and there are always some exceptions to the rule, for example, cooling off generally does not apply to auction contracts. It is important to consult with your conveyancing lawyer to confirm whether the cooling off period would apply to you.
If the cooling off period does apply and you want to rely on it to walk away from the contract, you must be prepared to pay the relevant penalty to the seller for exercising your right. This penalty is also allowed in the statutory provisions as a way of protecting the seller from the disingenuous buyers.
It is important to also ensure that the cooling off notice is properly served (delivered) on the seller and / or their representatives. Remember that if it is not done properly, it could leave to your intention to exercise the cooling off period null and void, leaving you still bound to complete the contract. If you are unable to complete after the lapse of the cooling off period, you’ll be risking your full deposit rather than just the cooling off penalty.
What to do during the cooling off period?
The cooling off period is generally used by the buyers to confirm that they really do want to proceed with the purchase. During this period, the buyer can serve notice on the seller that they no longer want to buy and can end the contract. The buyer does not need to provide any reason to the seller to exercise this right. Hence, this is truly the “get out of jail card” for the buyers who has this right, although it isn’t “free” because there is a penalty charge for exercising it.
If you are not going to simply change your mind during the cooling off period, then you should at least use the time allowed to do some basic research into the property to make sure that you are certain about buying the property. You can use it to do anything, from instructing your conveyancing lawyer to conduct some initial searches, to obtaining finance, to ordering a building and pest inspection of the property.
If you do not want to even risk the penalty charge, then you should take the opportunity to speak with your conveyancing lawyer before you sign the contract.
What searches should be ordered during the cooling off period?
The cooling off period is typically not enough time to order all the searches relevant to a purchase because most certificates can take a minimum of 3 – 5 business days to be received from the authorities. However, as a minimum you need to instruct your conveyancing lawyers to order the title search and review the plan to make sure that the property you have contracted to purchase is the one that you have inspected. There have been cases in the past where buyers have purchased the property next door because they didn’t ask their conveyancer to order a title search or their conveyancer didn’t pick up the orientation of the plan to confirm that the property was actually the wrong one. This can be a very costly and time-consuming mistake. Hence, make sure that you engage your conveyancing lawyer early to conduct all the necessary searches, don’t wait till your finance is approved because it might be too late then.
What is “due diligence”?
Due diligence is the act of exercise the proper amount of diligence when you are doing something. In the context of conveyancing, it means that you are doing all the researching and reading on a property to make sure that it serves the purpose that you intended. Some due diligence can be completed by your conveyancing lawyer, but even more must be completed by other professionals. For example, if you are looking to purchase a property for investment purposes, then you may want to speak to a property manager to make sure that they are confident in getting you a long term tenant to help you service the mortgage. If you are purchasing the property to live in, it is up to you to make sure that the property suits your needs, such as that the building you are moving into allow pets to be kept in the apartment units.
Understandably you will only know what you know and may miss out on checking on somethings. That’s why you should contact your conveyancing lawyer as early as possible to seek their general guidance. Your experienced conveyancing lawyer will at least be able to provide you with a checklist to go through as a part of your due diligence.