This information has been provided by
Australian law firm, Australian Conveyancing Services and is applicable in Queensland
only.
Introduction
The Property Agents & Motor Dealers Act 2000, came into force in 2001 (with various last-minute amendments in October 2001) (the “Act”). The Act has changed the landscape of buying and selling real estate in Queensland.
Buyer Beware
Prior to the Act, the common law motto “Buyer Beware” in purchasing real estate had very much been the position in Queensland. The essence of this motto is that it is really up to a buyer to check things out before signing a contract, because once the contract is signed, there is no turning back.
When does the Cooling Off Period apply?
The new Act now introduces a cooling-off period for Buyers on all contracts for the purchase of residential property in Queensland from 29 October, 2001. This means that a Buyer can terminate the contract within a period of 5 working days after the cooling off period commences.
NOTE: The cooling off period does not apply to AUCTION sales of residential property. However if the property is passed in at auction, and the buyer and seller negotiate a contract afterwards, then the cooling off period will apply.
When does the Cooling off period start?
Recent amendments have removed the requirement for a special
PAMD form 31a to be completed.
There is no replacement form. The new rule is that the Cooling Off period starts from the date that the
Contract becomes 'binding on the Buyer'. This date may
not be noted on
the Contract. The Legal date is actually the date that
all Buyers receive a physical copy of the Contract (which
has been signed by the Buyer and Seller). If that day
is a weekend or public holiday, the cooling off period
starts on the next business day. It ends at 5:00 pm on
the fifth business day after that.
It is a good idea to keep evidence of when the cooling off
period starts. For example, the seller or their Agent
could deliver the contract personally to the Buyer and ask
for a notice of receipt, or they could send the contract by
fax and keep the fax transmission statement.
What are the Seller’s rights if the Buyer wants to terminate?
The Buyer can terminate the contract during the 5 day cooling off period by giving the Seller or their Agent a signed written notice. The Buyer can only terminate the Contract during that period, so check the start and end date to make sure they are in time.
If they are in time and they have given written notice, then
they can legally terminate the Contract. As Seller, your only right
then is to charge the Buyer the ‘cooling off’ penalty – which is 0.25%
of the purchase price. If you would like to know what the amount could
be, insert a purchase price in the calculator below.
Make sure you get at least enough deposit from the outset to cover the penalty amount, this will mean that it is easier to recoup the penalty if the Buyer did decide to terminate.
Where a contract is
terminated by a buyer within the cooling off period, the
seller must refund the deposit within 14 days, but the
seller can deduct the termination penalty.
Can the cooling off period be waived?
Yes – as a Seller you may want the Buyer to waive the cooling off period (for instance, because you have other commitments that require you to have an unconditional Contract). Or as a Buyer you may feel that by waiving your right to the cooling off period, you will get a price or other advantage in getting the property.
As a Seller and in practical terms, you may decide that it is simply too hard to get the cooling off period waived. By the time the other conditions are met (such as finance and building report) the cooling off period is likely to be over anyway.
To waive the cooling off period, the Buyer needs to get a Lawyer’s Certificate (PAMD Form 32a). The Buyer will need to contact a Lawyer who, after explaining their legal rights, may sign the Certificate.
