While nobody involved in real estate transactions enjoys enforcing cooling off provisions, they do offer a valuable safety net when buying a house, enabling the buyer to cancel the contract.
However, there are specific ways to exercise your cooling off rights and, like all elements of contract law, there are some property transactions where they do not apply.
Read on to learn all about the cooling off period in South Australia and how to get it right.
Overview
- Buyers’ rights to cool off
- Sellers’ rights
- When does the South Australia cooling off period not apply
- How to ‘cool off’ on a property purchase
Cooling off period South Australia: what are my rights?
Buyers’ rights
Firstly, you only have the benefits of ‘cooling off’ if you are buying, not selling a property.
How long is the cooling off period in South Australia?
Under South Australian law, property buyers can withdraw from the sale contract at any time during the first two clear business days after they have been ‘served’ the Form 1.
In other words, if you are served with the Form 1 on a Friday before a long weekend, you have until the end of Wednesday to cool off because weekends and public holidays do not count in the cooling off period in South Australia and neither does the day you were served the Form 1.
The benefit of the cooling off period when you’re buying a house is that you have time to get extra building inspections done and do further thinking to make sure you are making a sound decision. There is not enough time to arrange finance during a cooling off period so our advice has always been to have that in place first or to make sure the contract is subject to finance approval.
Sellers’ rights
However, sellers do not have the same rights. Once the contract has been entered into, they must go through with the sale under the conditions and price agreed to by both parties.
When does the cooling off period not apply?
As with all legal issues, there are bound to be exceptions where cooling off does not apply and these include:
- Properties bought at auction
- Properties bought by companies (although new provisions made in 2014 extend some protection to companies under some circumstances. I will write more on that later)
- Properties bought through a tender process
How to ‘cool off’ on a property purchase
It is important to note that you do not need to give a reason for cooling off (aka choosing not to go through with the purchase of the house). However, you must cool off in an appropriate way by providing cooling off notice in writing. You can do this by:
- Writing to the vendor or real estate agent stating you do not wish to be bound by the contract
- Faxing the vendor or their agent with your notice
- Handing your notice to the vendor or their land agent in person
- Leaving your notice at the agent’s office
- Posting your notice to the vendor’s address by registered mail
However, the widespread use of email means that as of the first of January, 2014, you can also cool off by email.
My advice is to make sure you keep a copy of the email and have evidence that it was sent because the onus is on you to prove you sent it should there be a dispute.
The purchaser’s rights to ‘cool off’ are set out in Part B of the Form 1 [Land and Business (Sale and Conveyancing) Regulations 2010 Schedule 1].
Provided you cooled off appropriately, any deposit you had paid, of more than $100, will be refunded to you.
There are many other facets involved in cooling off , which is why I suggest you build your relationship with your conveyancer as early as possible in your real estate buying process.
