By Julia Thermos

17 June 2015

Section 31 of the Sale of Land Act gives a Purchaser the right to terminate a Contract of Sale within three business days of signing, subject to several conditions and exclusions.

If a Purchaser terminates a Contract of Sale in accordance with section 31 of the Sale of Land Act, the Purchaser will be entitled to the return of the deposit paid except for the sum of $100.00 or 0.2% of the purchase price under the Contract of Sale, whichever is the greater.

For example: If a Purchaser ‘cools off’ on the purchase of a property with a purchase price of $1,000,000.00 the Purchaser will forfeit the sum of $2,000.00 to the Vendor.

  • The ‘cooling off’ period does not apply in any of the following circumstances:
  • If the property is purchased at an auction or within three clear business days before or after an auction;
  • If the Purchaser is a corporate body (i.e. a company);
  • If the Purchaser is an estate agent;
  • If the Vendor and Purchaser have previously entered into a Contract of Sale for the sale of the same property on substantially the same terms;
  • If the property is used primarily for commercial or industrial purposes; and
  • If the property is more than 20 hectares and is used primarily for farming.

We recommend that all Purchasers obtain legal advice prior to executing a Contract of Sale to ensure that the Contract of Sale and Vendor Statement have been thoroughly reviewed and any potential issues are identified prior to signing. It is always better to be aware of any potential issues at the outset rather than relying on the ‘cooling off’ provision, which should only be used as a last resort.

Tip: In order to ‘cool off’ you must serve written notice on the Vendor or on the Vendor’s Estate Agent using the addresses specified in the Particulars of Sale in the Contract.

Tip: It is important to note that the three business days start running from when the Purchaser signs the Contract of Sale and not from when the Vendor signs (as this may not be the same day).

 

Any further questions, please contact Julia Thermos or a member of our Property Law team.

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