While nobody involved in real estate transactions enjoys enforcing cooling off provisions, neither buyers nor sellers alike, they do offer a valuable safety net.
However, like all elements of contract law, there are some property transactions where they do NOT apply, and there are specific ways to exercise your cooling off rights.
Cooling off provisions in South Australia
Firstly, you only have the benefits of ‘cooling off’ if you are buying a property, not selling one.
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. You can read more about the Form 1 here.
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 the day you were served, weekends and public holidays do NOT count in the two clear business days provision.
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.
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 this year, 2014, extend some protection to companies under some circumstances. I will write more on that later)
- Properties bought through a tender process
The benefit to you when buying is that you have time to get extra building inspections done and do further thinking to make sure you are making a sound purchasing decision. There is not enough time to arrange finance during a cooling off period so my advice has always been to have that in place first or to make sure the Contract is subject to finance approval.
It is also important to note that you do NOT need to give any reason for cooling off. However, you must cool off in an appropriate way.
You can now cool off by email
The world is constantly changing and new technology finds a way of altering processes of the past.
For as long as I can remember, the following ways have been the agreed process for notifying the vendor that you are cooling off:
- Writing to the vendor or 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 this year, 2014, you can now 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, must be refunded to you.
There are many other facets involved in cooling off that I plan to cover throughout this year, which is why I earnestly suggest you build your relationship with your conveyancer as early as possible in your real estate buying process.