Cooling Off a Property Contract in Victoria. How It Works, When You Can Use It, When You Cannot, and Why Doing It Wrong Can Cost You Thousands

As explained by David Dawn at Victorian Property Settlements, cooling off a Contract of Sale in Victoria is not difficult, but it is very easy to get wrong. Getting it wrong can leave you stuck in a binding contract that you never intended to proceed with. This article explains who the cooling off right applies to, what it allows you to do, when you can use it, when you cannot, how to do it correctly, and why proper help matters.

Victorian Property Settlements has been trusted for more than twenty five years to guide buyers and sellers through these rules. If you are in any doubt about your cooling off rights, contact us. Do not try to navigate this alone. You should get advice from a licensed conveyancer, whether that is us or another competent conveyancing practitioner.

What Cooling Off Actually Is

Cooling off is a statutory right created under section thirty one of the Sale of Land Act 1962 in Victoria. It allows a purchaser of residential real estate to withdraw from a signed contract within a short period, even after they have already signed the contract. It acts as a brief safety valve if a purchaser signs before getting advice.

Cooling off is not automatic in all situations and does not apply to every property. It also comes with a penalty, which must be paid when exercised.

When You Can Use the Cooling Off Right

You can cool off if all the following apply:

You purchased residential property by private sale.

The property is not farmland over twenty hectares and is not used mainly for commercial or industrial purposes.

You are not a licensed real estate agent or a corporate purchaser signing in the ordinary course of business.

You did not sign a previous contract for the same property in near identical terms.

You purchased outside the three business day auction rule.

When You Cannot Cool Off

The cooling off right does not apply if:

You purchased at a public auction.

You signed within three clear business days before or after an advertised auction for that same property.

You are buying commercial or industrial property, or farmland over twenty hectares used mainly for agriculture.

You have already signed an earlier version of the contract for the same property.

How Long the Cooling Off Period Really Lasts

The cooling off period is three clear business days. That means you do not count weekends and you do not count public holidays. The period begins the first business day after the day you sign the contract.

For example:

If you sign a contract on Monday, the cooling off period runs Tuesday, Wednesday and Thursday. It expires at the end of Thursday.

If Monday is a public holiday and you sign then, the cooling off period begins on Tuesday and ends at the end of Thursday.

Once the period expires, you cannot revive it.

How to Cool Off Properly

Cooling off must be done in writing. Email is perfectly acceptable. Personal delivery is also acceptable. The safest option is to do both.

Your written notice should clearly state that you are cancelling the contract under section thirty one of the Sale of Land Act 1962.

You must send your cooling off notice to the correct party. This is where many buyers make serious mistakes. We regularly see buyers send notices to buyer’s advocates or to the real estate agent but never send it to the actual party listed in the contract. If the notice is not sent to the vendor directly or to the vendor’s solicitor or conveyancer at the address for service stated in the contract, then you have not properly cooled off.

The correct approach is simple:

Send your notice to the vendor’s solicitor or conveyancer at the address for service in the contract.

Send a copy to the vendor and real estate agent for transparency.

Use email and personal delivery where possible.

Do not make it a secret. If you are cooling off, tell everyone. The worst cooling off attempts are the ones only one person knows about.

What Happens After You Cool Off

Once your notice is validly given within time:

The contract is cancelled.

You receive your deposit back minus the statutory penalty.

The penalty is the greater of one hundred dollars or zero point two percent of the purchase price.

For example:

If the purchase price is eight hundred thousand dollars, zero point two percent equals one thousand six hundred dollars. That amount is deducted from your deposit refund.

Cooling off has no effect on any building inspections, the Section thirty two Statement, or any other condition of the contract. It simply ends the agreement.

What Happens If You Try to Cool Off Incorrectly

If you send your cooling off notice to the wrong person or send it too late, the contract remains binding.

If you fail to settle later, you risk:

Losing your entire deposit.

A default notice.

Penalty interest.

A claim for damages by the vendor.

You cannot simply say you “thought you cooled off” if you have not done it lawfully. This is why getting advice early matters.

Why You Should Never Try Cooling Off Alone

Cooling off is a simple concept, but the execution must be exact. The timing rules, service rules and exceptions in the Sale of Land Act 1962 must all be followed precisely.

If you are uncertain about any step:

Contact Victorian Property Settlements.

Or obtain advice from another competent licensed conveyancer.

This is not the time to guess or rely on informal advice. Your home and your deposit are too important.

Victorian Property Settlements
Trusted for over twenty five years by Victorian buyers and sellers
www.victorianpropertysettlements.com.au