Making an offer on a property to purchase can be quite daunting..
This week I spoke to John Melis from LegalAU about ‘cooling off’ periods and what they mean to both vendors and purchasers..
“Once a contract of sale has been signed by both the vendor & purchaser and consideration (deposit) paid, it is binding on the parties, which means the vendor and purchaser can be legally bound by the terms of the contract.
But can the purchaser end the contract after they have signed the agreement?
Well, the Sale of Land Act 1962 has created a statutory right for the purchaser, in certain situations to end the contract. Section 31 of the Act allows the purchaser to terminate the contract within three (3) clear business days of signing. However, section 31(5) of the Act states that the cooling off period will not apply three (3) business days before or after a publicised auction, or if the parties had entered into a contract before in relation to the property, or if the purchaser is an estate agent or company.
In Victoria a purchaser who cancels the contract within three (3) clear business days is entitled to a refund of the deposit less the greater of $100 or 0.2% of the purchase price.
So what is the meaning of clear business days?
Section 30 of the Act describes three (3) clear business days as, excluding the day you sign the contract, then the first business day following as the first clear business day. So if a contract is signed on a Saturday, the first business day is a Monday, and the three (3) clear business days ends on Wednesday, with Wednesday being the third business day.
The time when the three (3) clear business days’ start, is when the purchaser signs the contract, and the timing calculation commences on the next business day. This is even so if the vendor has not signed the contract at that time. Once the three (3) clear business days have passed the purchaser loses the right to cool off under the Act. If this is the case and the vendor still has not signed the contract, the purchaser can rescind their offer, as the vendor has not signed the contract and communicated the same to the purchaser.
If the purchaser wants to use the cooling off period, notice must be issued in writing to the vendor or the vendors agent within the 3 clear days of the cooling off period.
So always keep in mind before you sign that contract, know your legal rights in advance!”
The comments in the aforementioned do not constitute legal advice and are general in nature, and if legal advice is required please contact: John Melis at Legal AU Pty Ltd (03) 9999 7799 www.legalau.com