Do you remember a time when you made a purchase and regretted it later? Every one of us has experienced this at some point. This is why cooling-off periods are crucial, as they allow us to cancel a purchase that we no longer wish to make.
There are cooling-off periods for telemarketing sales, property sales, and motor vehicle financing. However, as each type of contract has different requirements, it’s essential that you’re aware of your contractual rights before signing anything.
To simplify things for you, we have created a guide to cooling-off periods in NSW.
Read along!
Table of Contents
What is a cooling-off period
Generally, a cooling off period is the period of time following the signing of a contract, during which you have the right to cancel the contract without being charged any cancellation fees.
Cooling Off Period in Telemarketing Sales
When you make a purchase from a telemarketer, you are still entitled to a written document. This document will detail the terms and conditions of the purchase as well as the sale price of the product. With these contracts, by law, your acceptance of the terms and conditions over the phone is the equivalent of signing the hard copy of the contract.
According to New South Wales Fair Trading, you’re provided with a 10-business day cooling off period. During this time period, you’re permitted to terminate the contract you entered without facing any penalty.
The cooling-off period for a purchase you’ve made through telemarketing starts on the first business day after you have received your agreement. During this time period, you are able to cancel the purchase without paying any fees.
Cooling off period for Property Purchase Contracts
If you’re thinking about purchasing residential property, you need to be aware that your contract is legally binding after the contracts are signed, and you exchange contracts. One of the copies of the property contract will be provided to you, and the other is provided to the vendor. The vendor is the individual or business you’re purchasing the property from. Your cooling off period will start once the signed contracts are exchanged.
The cooling off period applies for 5 business days where you will be able to get out of the contract if you change your mind. You can have this time period extended by negotiating with your vendor. You should be aware that you’re not entitled to a cooling-off period if you buy property at an auction. Additionally, you are not provided with a cooling-off period if you are leasing the property.
If you choose to withdraw from your contract, you should be aware of the following:
- Your cooling off period ends at 5 pm on the fifth business day following the exchange of contracts, not at midnight
- You can use a section 66W certificate to have the cooling period waived. The certificate must fulfil the legal requirements outlined in section 66W of the Conveyancing Act 1919.
- You will be required to pay the vendor 0.25 percent of the purchase price after you withdraw from the contract of sale using your cooling-off rights
Cooling-off period for the Financing of Motor Vehicles
If you’re purchasing a car, after you have signed a contract to purchase a car, you’re provided with a cooling-off period of one day. This period will end at 5 pm on the next business day the car dealer you purchased the car is open. If you choose to withdraw from the contract, then you must provide written notice to the dealer.
Section 81 of the Motor Dealers and Repairers Act 2013 states that cooling-off periods for the purchase of motor vehicles can be extended through the contract of sale for the motor vehicle or through an agreement between the purchaser and the motor dealer.
Furthermore, the right to withdraw from the contract is still exercisable even if the vehicle has been delivered to you. You should also be aware that you’re not legally entitled to possess the motor vehicle during the cooling-off period unless you and the dealer have agreed to this.
Frequently Asked Questions
What should I do during the cooling-off period when purchasing real estate?
- You should obtain a pest report
- You should organise a building inspection
- You should obtain a valuation report of your potential new home
- You should exercise due diligence
- You should make sure your home loan application has been approved or that you have secured your finances from your lender if applicable
What happens if you withdraw from a property contract after the cooling off period has ended?
You should be aware that you may face legal consequences for withdrawing after your cooling off period has ended, whether you’re the purchaser or the seller. As a purchaser, the real estate agent of the seller could choose to sue you for damages due to the commission they have lost.
Alternatively, if you pull out of the contract as the seller of the property, you may also face legal consequences from the real estate agent and the buyer.
Conclusion
The length of your cooling-off periods, when applicable, will depend on the type of contract you enter. To summarise, the cooling-off period for a telemarketing contract is 10 days, the cooling-off period for a property purchase is 5 business days, and the cooling-off period for a motor vehicle purchase is 1 business day.
Nevertheless, some contracts will still require a fee. Therefore it’s vital that you thoroughly read your contracts before signing them. This can sometimes be a complicated process. Therefore, you should hire a lawyer for legal advice in order to avoid making a mistake.
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