Buying or selling a home is one of the most significant financial decisions most people will make. Because of this commitment’s legal and economic weight, Australian property law includes several consumer protections designed to give buyers some breathing room — one of the most important being the cooling-off period.
A cooling-off period is a short window after a buyer has signed a contract to purchase a property, during which they can cancel the agreement without severe legal or financial penalties. However, while the concept is simple, its details can vary based on the state or territory, the type of property, and whether the sale was conducted privately or via auction. In this article, we’ll break down everything you need to know about cooling-off periods in Australia — what they are when they apply, how they protect you, and what the exceptions are.
What Is a Cooling-off Period?
A cooling-off period is a legal right that allows a buyer to reconsider their decision to purchase a residential property after signing the contract. During this timeframe, the buyer can withdraw from the contract for any reason — or no reason — typically incurring only a small financial penalty.
The purpose of this period is to protect buyers from high-pressure sales tactics and to give them time to seek professional advice, conduct inspections, or review contract terms more thoroughly.
How Long Is the Cooling-Off Period?
In New South Wales, the cooling-off period is 5 business days, starting from the day the contract is signed by both parties.
In other states and territories, the length of the cooling-off period differs:
- Victoria: 3 business days
- Queensland: 5 business days
- South Australia: 2 business days
- ACT: 5 business days
- Northern Territory: No statutory cooling-off period, but may be included by contract.
- Western Australia and Tasmania: No mandatory cooling-off periods for property purchases, though voluntary clauses can be added
It’s important to note that weekends and public holidays are not counted as business days, and the countdown starts once the buyer receives a copy of the fully signed contract.
When Does the Cooling-Off Period Apply?
The cooling-off period generally applies to private treaty sales — that is, sales negotiated between buyer and seller (or through their agents) outside an auction environment.
It does not apply in the following situations:
- Properties sold at auction
- Sales made within two business days before or after an auction, if the buyer attended the auction
- Commercial or industrial properties
- Vacant land for commercial use
- When the buyer waives or shortens the cooling-off period by providing a certificate from a solicitor or conveyancer (in states where this is allowed)
How to Exercise Your Right to Cool Off
If a buyer decides to withdraw from the contract during the cooling-off period, they must notify the seller or the seller’s agent in writing — a phone call won’t suffice.
Once this notification is received within the allowable time frame, the contract is considered terminated, and the buyer is entitled to a refund of their deposit minus the penalty.
What Is the Financial Penalty?
In most jurisdictions, buyers must pay a minor penalty if they pull out during the cooling-off period. For example:
- In NSW, the buyer forfeits 0.25% of the purchase price.
- In QLD, the penalty is also 0.25% of the purchase price.
- In Victoria, the buyer may lose 0.2% of the purchase price.
- In SA, the buyer is entitled to a full refund unless otherwise stipulated in the contract.
- In ACT, the penalty is 0.25%
So for a $1,000,000 property in NSW, cancelling during the cooling-off period would cost the buyer $2,500.
This penalty is designed to deter impulsive buyers while offering a reasonable way out for those who change their minds or uncover issues during early due diligence.
Can the Cooling-off Period Be Waived?
Yes, in some jurisdictions — like NSW — a buyer can waive their right to a cooling-off period by signing a Section 66W certificate, which a solicitor or conveyancer must issue, and this certifies that the buyer understands their rights and is knowingly giving them up.
Sellers often encourage buyers to waive the cooling-off period to make offers more attractive or to speed up the sale. However, this increases the risk for buyers, especially if they haven’t completed key checks like pest or building inspections or haven’t secured financing.
Why You Shouldn’t Rush to Waive It
The cooling-off period isn’t just a bureaucratic formality — it’s a vital window of protection. During this time, buyers can:
- Obtain legal advice on the contract
- Conduct building, pest, or strata inspections
- Finalise their home loan
- Clarify any complex clauses or negotiate terms
- Back out with minimal financial risk if something doesn’t feel right
Waiving this period without completing these steps can leave buyers vulnerable to unexpected issues — structural problems with the property, legal encumbrances, or even the inability to secure financing, potentially putting their entire deposit at risk.
Strategic Use of the Cooling-off Period
Smart buyers use the cooling-off period strategically. For example:
- Make an offer with a cooling-off period, but schedule inspections immediately. This way, you lock in the property but still have the option to withdraw if red flags are found.
- Negotiate a longer cooling-off period, especially if you need more financial approval or due diligence time.
- Use it as leverage in price negotiations. If a defect is found during inspection, a buyer may threaten to walk away unless the seller reduces the price or agrees to fix the issue.
Final Thoughts: Know Your Rights and Protect Your Interests
The cooling-off period is one of the most important safeguards for property buyers in Australia. It allows you to double-check your decision, consult with legal and financial professionals, and ensure you’re not walking into a bad deal.
If you’re unsure about your rights or are being asked to waive your cooling-off period, seeking legal advice from a qualified property lawyer or conveyancer is essential. This simple step could save you from significant financial and legal consequences later down the line.
Need Legal Advice on Your Property Purchase?
Suppose you’re buying or selling property and want to understand your rights, obligations, and risks. In that case, our team of experienced property lawyers can guide you through the process — including how best to approach the cooling-off period.
Contact us today for a free consultation and make your next property transaction a smooth and confident one.
