Buying A House? How You Can Cancel A Contract And Escape Heavy Penalties
Posted on: 8 July 2016
Moving in to a new house is like a dream come true for many. However, that joy may vanish if you find that things are not as you expected after moving in. Maybe the house is not in the same condition as when you first saw it, or you discover a problem with the house that you were not aware of. So what can you do if you no longer like the house and you have already signed the contract? There is only one option, which is to activate the cooling-off period clause in the contract.
The Cooling-Off Period
In real estate, the cooling-off period refers to the period within which you can cancel a house agreement contract. The period usually begins after you have received a copy of the signed contract (signed by both you and the seller).
How It Works
Although the cooling-off period is a get out of jail free card, you can't use it anytime you want; the time frame varies from region to region. In Queensland, ACT and New South Wales, the period is five days. Victoria region offers a three day cooling-off period, while Southern Australia offers two. In some states, like Western Australia, the cooling-off period doesn't even exist. So it is best to check with your solicitor or conveyancer if it is even possible to cancel the contract before agreeing to anything.
If your state or region offers the cooling-off period, the period begins the day you receive the contract and ends at 5 pm on the last day of the period. If a Sunday or holiday is lodged within the period, it is not considered as a day of business. You cancel the contract by writing a letter to the agent within the cooling-off period. If you delay even by a minute, the contract still stands. You can deliver your message by mailing it to the agent or taking the letter personally to the agent. It is not necessary to explain your reasons for cancellation.
It is important to note that a small penalty may exist. In states that allow the cooling-off period, you may be charged a small fee of 0.25%. So, if you purchased the house for $100,000, you may be charged $250.
Conditions Under Which The Cooling-Off Period Doesn't Apply
You can't use the cooling-off period if your state doesn't allow. Besides that, there are other conditions under which the cooling-off period does not apply. One is if the house is being sold through an auction. Another condition is if you are a publicly listed company or a subsidiary of the company. The period also doesn't apply if the buyer is a statutory body or a state.
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