Understanding the Cooling-Off Period When Buying Property in NSW
When buying or selling property in New South Wales, one of the first terms you’ll hear is the cooling-off period. But what exactly does this mean, and how does it affect your rights as a purchaser?
What Is a Cooling-Off Period?
The cooling-off period allows a purchaser to secure a property while still having time to finalise key matters such as pre-exchange inspections, pest and building reports, and finance approval.
In NSW, residential property purchasers are generally entitled to a five-business-day cooling-off period following the exchange of contracts. During this time, the purchaser may choose to withdraw from the contract for any reason before 5:00 pm on the fifth business day.
It’s important to note that cooling-off rights only apply to the purchaser, not the vendor.
If you require more time — for example, to receive finance approval or complete inspections — your solicitor or conveyancer may request an extension of the cooling-off period from the seller’s representative.
When Does the Cooling-Off Period Not Apply?
Certain property types and sales methods are excluded from the standard cooling-off protections. These include:
• Properties sold at auction
• Properties zoned as rural or commercial
• Certain off-the-plan purchases, although these now benefit from an extended 10-business-day cooling-off period due to the complexity of such contracts
For more information on purchasing property at auction or buying rural or commercial land, see our related articles on those topics.
What Deposit Is Required at Exchange?
Unless otherwise stated, the standard deposit on exchange is 10% of the purchase price.
However, if you exchange contracts with a cooling-off period, you will usually pay a 0.25% deposit at exchange if agreed to by the vendor and the balance of the deposit must be paid before the expiry of the cooling-off period.
Can You Waive the Cooling-Off Period?
Yes. A purchaser may elect to waive their cooling-off rights by having their solicitor or conveyancer provide a Section 66W Certificate to the seller’s representative. Once this certificate is provided, the contract becomes immediately unconditional, meaning the buyer cannot later withdraw without penalty.
What Happens If You Terminate During the Cooling-Off Period?
If a purchaser decides to withdraw from the contract during the cooling-off period, they will forfeit 0.25% of the purchase price to the vendor. While this is a relatively small amount, it serves as compensation for the seller taking the property off the market during that time.
Buying property is one of the most significant financial decisions you’ll ever make — and understanding your rights during the cooling-off period is crucial.
At Dawson Pouwhare Legal & Conveyancing, our experienced team can guide you through every stage of your purchase, ensuring you make informed decisions and avoid costly mistakes.
Contact our friendly team today
on
(02) 4954 8666 or visit
www.dawsonpouwhare.com.au to arrange an appointment.











