Cooling-off and contracts in New South Wales

A buyer of residential property in New South Wales has a five-business-day cooling-off period after exchange, unless the property was bought at auction or the right was waived. Exchange comes early here. The buyer signs and then checks inside the window, so the documents attached to the contract do the work a separate disclosure statement does elsewhere.

The cooling-off period

The right is in Division 8 of Part 4 of the Conveyancing Act 1919. A buyer of residential property may rescind at any time before 5pm on the fifth business day after the day the contract was made. The period starts at exchange and is exercised by giving the vendor written notice inside that window.

A buyer who rescinds during the period forfeits 0.25% of the purchase price to the vendor, which the NSW Government describes as $250 for every $100,000.

Off-the-plan contracts get a 10-business-day period, because those contracts are large and complex.

When there is no cooling-off

Section 66T of the Act lists the exclusions. There is none when the property is sold by public auction. There is none when the contract is made on the same day the property was offered at auction but passed in. The Act says the same day; a two-business-day window is not the NSW rule.

A buyer can also give the right away. If, at or before exchange, the buyer gives the vendor a certificate that complies with section 66W, there is no cooling-off period. The certificate is signed by the buyer's lawyer or conveyancer, who confirms they have explained the effect of the waiver. The exchange is then unconditional from the moment it happens, so the checks a buyer would do inside the window have to be finished before it. The 1990 wording named solicitors and barristers; licensed conveyancers were added later.

What the seller must give you

The disclosure is the contract itself. Schedule 1 of the Conveyancing (Sale of Land) Regulation 2022 prescribes the documents attached before signing, and every agent who offers a property for sale must hold the proposed contract.

They start with the property certificate (the title search), the registered plan and the dealings on the title, such as easements. A planning certificate is attached unless the land is outside a local government area. Sewer diagrams show the sewer lines and the point of connection, where the authority has them. A swimming pool or spa pool needs a certificate of compliance, a relevant occupation certificate with evidence of registration, or a certificate of non-compliance. Land in a community scheme needs the certificates for the lot and the community property plus the community plan. Land under a building management statement needs that statement. The contract must also list any exclusions and carry the prescribed cooling-off statement.

If a prescribed document is not attached before signing, the purchaser may rescind within 14 days of exchange. Strata lots have their own prescribed attachments in the same Schedule.

Reading the documents is the conveyancer's or solicitor's job. Two are worth the buyer's own eye: the plan, for whether the fences match the boundaries, and the dealings, for any easement or covenant that limits what can be built.

The contract, the deposit and settlement

The deposit is 10% of the purchase price unless a lesser sum, for example 5%, is agreed. Because contracts are generally exchanged with a cooling-off period, the buyer can pay 0.25% to exchange, with the balance, usually 9.75%, payable before the period ends.

Settlement generally takes place around six weeks after exchange. The buyer's conveyancer or solicitor can check and negotiate the period with the seller. The standard contract's default clause is not published on an official domain and is not stated here. Settlement is electronic: since 11 October 2021 every dealing lodged with NSW Land Registry Services goes through an approved electronic lodgment network. The buying process page covers the sequence.

Before you sign

1. Send the contract to a conveyancer or solicitor before exchanging, not after.
2. Check that every Schedule 1 document is attached, including the pool certificate if there is a pool.
3. Confirm whether finance is unconditional and, if not, what happens to the deposit if the loan is declined after the period ends.
4. Book the building and pest inspection and any strata report so the results arrive inside the window.
5. Read the settlement date and the deposit clause, and confirm who holds the deposit.
6. Compare the inclusions and exclusions with what was in the property at inspection.
7. Do not sign a section 66W certificate without knowing which checks it removes.
8. Diarise 5pm on the fifth business day after exchange.