When entering into a contract to buy residential property in New South Wales, it’s important to understand your rights regarding rescission, dispute handling, and how auction sales differ from private treaty contracts. Page 6 of the NSW Contract for the Sale and Purchase of Land (2022 edition) outlines these critical legal provisions.

Cooling-Off Period: Purchaser’s Rights

Under section 66X of the Conveyancing Act 1919, purchasers of residential property are given a statutory right to rescind (cancel) the contract within a limited time.

When Can a Buyer Rescind the Contract?

• Off-the-plan purchase: Within 10 business days after the contract date (before 5 pm).
• All other cases: Within 5 business days after the contract date (before 5 pm).

This provides a window for buyers to:

• Obtain legal advice
• Conduct further due diligence
• Secure finance or final approvals

When There Is No Cooling-Off Period

The right to rescind does not apply in the following circumstances:

1. The buyer waives the cooling-off period by signing a section 66W certificate from a solicitor or conveyancer.
2. The property is sold via public auction.
3. The contract is signed on the same day as the auction but after the property was passed in.
4. The contract arises from exercising a call option under section 66ZG of the Act.

Important: Once waived or excluded, there is no statutory “grace period” to back out without penalty.

Financial Consequences of Cooling Off

If a purchaser exercises their right to cool off, the following applies:

• The buyer forfeits 0.25% of the purchase price to the vendor.
• The balance of any deposit already paid is refundable.

Example:
On a $1,000,000 property, a buyer who rescinds during the cooling-off period would forfeit $2,500.

Dispute Resolution

If a dispute arises between the buyer and seller:

• Parties are encouraged to use informal resolution methods first.
• The Law Society of NSW offers services such as:
  • Mediation (e.g., under the Law Society Mediation Program)
  • Conveyancing Dispute Resolution Scheme
  • Independent expert appraisal

These alternatives are faster and less costly than litigation and often lead to more amicable outcomes.

Auctions: What You Need to Know

Sales conducted at public auction are governed by the Property and Stock Agents Act 2002, which includes:

• Mandatory pre-auction disclosure
• No cooling-off period
• Binding immediate contract upon a winning bid

Buyers must be fully prepared (finance, due diligence, legal review) before bidding at auction.

Frequently Asked Questions (FAQs)

Can I cancel a contract after signing it?
Yes, but only within the cooling-off period, unless you’ve waived that right.

What is a section 66W certificate?
A legal certificate that waives the purchaser’s cooling-off rights. It must be signed by a solicitor or licensed conveyancer.

Is there a cooling-off period after an auction?
No. Auction sales are final. You must be prepared to sign and pay the deposit immediately.

What happens if I pull out during the cooling-off period?
You forfeit 0.25% of the purchase price. The rest of your deposit is returned.

Disclaimers

Legal Disclaimer: This content is intended to provide a general overview of the relevant legislation and should not be relied upon as legal advice. Property and planning laws are subject to change and may vary depending on specific site conditions and council policies. For advice tailored to your circumstances, please consult a qualified legal or planning professional.

General Disclaimer: This article is provided for general informational purposes only and does not constitute legal, planning, or environmental advice. While every effort has been made to ensure accuracy, the information may not reflect the most recent changes in law or policy. You should seek advice from a qualified professional or relevant authority before making any property-related decisions.