What is Cooling-off Period in Victoria and How Does It Work?

In Victoria, a cooling-off period is a specific timeframe during which a buyer can legally withdraw from a property purchase without facing significant financial penalties.

The cooling-off period works in the following manner:

1. Duration: The cooling-off period typically lasts for three clear business days, although the exact duration may vary depending on the terms negotiated in the contract of sale.
2. Commencement: The cooling-off period begins once the buyer signs the contract of sale and receives a copy of it. The seller does not have a cooling-off period.
3. Withdrawal: During the cooling-off period, the buyer has the right to withdraw from the contract by providing written notice to the seller or their agent. This notice must be delivered before the cooling-off period expires.
4. Penalty: If the buyer withdraws during the cooling-off period, they are generally required to pay a penalty known as the “cooling-off fee”. This fee is usually a small percentage of the purchase price (typically 0.2%) and is paid to the seller.
5. Exceptions: There are certain circumstances where the cooling-off period may not apply, such as if the property is purchased at an auction, if the buyer waives their cooling-off rights in writing, if the property is purchased by an estate agent or a corporate body, or the purchase is for commercial property.
6. Legal Advice: It’s advisable for buyers to seek legal advice before signing a contract of sale and during the cooling-off period to ensure they understand their rights and obligations.

It’s essential for buyers to be aware of the cooling-off period and its implications when purchasing property in Victoria. While it provides a degree of flexibility, buyers should carefully consider their decision before signing a contract, as withdrawing during the cooling-off period still incurs some financial cost.

Does a cooling-off period apply to buyers and vendors?

In Victoria, the cooling-off period applies to residential property buyers and not vendors. However, there are exceptions, such as properties sold at auction as there is no cooling-off period.

Can a vendor waive a cooling-off period?

A seller in Victoria cannot waive the cooling-off period in the contract. This is done to protect property buyers so they have time to consider the purchase.

For reliable and professional conveyancers in Victoria, contact Red Door Conveyancing on 03 8456 6797 for more details.