Cooling-off periods when buying property in NSW

The cooling-off period is one of the most misunderstood parts of buying a home in NSW. It gives a buyer a short window to withdraw after exchange, but it has real limits and a real cost. This guide explains how it works.

What the cooling-off period is

When you buy a home by private treaty in NSW, you usually get a cooling-off period after contracts are exchanged. During that window you can withdraw from the purchase, for any reason, by giving notice. It is there to give a buyer a short time to finalise finance, inspections, and advice after committing.

The thing to understand is that the cooling-off period is a limited safety net, not a free trial. It is short, it costs money to use, and in some situations it does not apply at all. Knowing where you stand before you exchange is what matters.

How long it lasts

For a standard residential purchase, the cooling-off period is 5 business days. It starts when contracts are exchanged and ends at 5pm on the fifth business day. For an off-the-plan purchase, the period is longer, generally 10 business days.

What it costs to withdraw

Withdrawing during the cooling-off period is not free. If you rescind during the period, you forfeit 0.25 per cent of the purchase price to the seller. That is $250 for every $100,000. For a $1 million purchase, that is $2,500. It is a modest cost against the price of the home, but it is not nothing, and it is worth knowing before you rely on cooling-off as your way out.

Waiving or shortening the period: the section 66W certificate

Sellers often ask a buyer to waive the cooling-off period, especially in a competitive sale. This is done by your solicitor or conveyancer giving the seller a section 66W certificate, which waives or shortens the period.

Our firm advice is simple and firm. Do not sign a 66W certificate until you are genuinely ready to be bound, which usually means your finance is unconditionally approved, your inspections are done, and your solicitor has reviewed the contract. A 66W certificate signed too early removes your safety net at the exact moment you might still need it.

When there is no cooling-off period

There is no cooling-off period in several situations. The most important is that there is no cooling-off period if you buy at auction, or if you exchange contracts on the same day a property is passed in at auction. There are also some other sales where it does not apply, such as certain rural land and some commercial property.

This is why buying at auction is higher risk. You have no cooling-off, so your finance, your inspections, and your contract review all have to be done before you raise your hand. There is a separate article in this series on buying at auction.

How we help

We advise buyers on their cooling-off rights before exchange, review the contract within the period so you can act while you still have the option, and tell you honestly whether it is safe to sign a 66W certificate. For sellers, we deal with the buyer's cooling-off and any 66W request. Either way, the key is to understand the position before you exchange, not after.

Frequently asked questions

How long is the cooling-off period in NSW? 5 business days for a standard residential purchase, generally 10 business days for an off-the-plan purchase.

What does it cost to withdraw during cooling-off? 0.25 per cent of the purchase price, which is $250 for every $100,000.

What is a 66W certificate? A certificate your solicitor gives the seller to waive or shorten the cooling-off period. Only sign one when you are ready to be bound.

Is there a cooling-off period at auction? No. There is no cooling-off period for a purchase at auction, which is why auction purchases carry more risk.

Keep reading

• Property and conveyancing
• Buying a home in NSW: the conveyancing process explained
• Buying at auction: the legal differences

This article contains general information only and is not legal advice. For advice about your situation, please contact us. Liability limited by a scheme approved under Professional Standards Legislation.