Cooling-Off Periods Explained: What They Cost You

When you buy a property by private treaty, you generally have a statutory cooling-off period of five business days from the point of exchange. That period exists to give you a short window after exchanging contracts to reconsider the purchase, or to attend to any final checks, before the sale becomes fully binding.

The cooling-off period is not without cost. Within that window you are able to withdraw from the contract, though if you do, you will usually forfeit 0.25% of the purchase price. On an $800,000 property, for example, that would be $2,000. Withdrawing is therefore possible, though it is not free, and there can be other risks and monetary losses involved as well.

Not every purchase comes with a cooling-off period. The most common example is buying at auction, where there is generally no statutory cooling-off period at all. We explain how that works, and why it makes having the contract reviewed beforehand so important, in our article on [link to "Buying at Auction: What to Know Before the Hammer Falls"]. Where there is no cooling-off period, it can be extremely difficult to withdraw from or rescind a contract once it has been signed.

The real takeaway is a simple one: it is far better to seek legal advice before you enter the contract than to rely on getting out of it afterwards. Having the contract reviewed early means you understand your obligations, and your cooling-off rights, before you commit.

We have prepared this article to share general information. For personal advice, book a consultation with our team.