Cooling-Off Period: Your Legal Rights Explained

Introduction

After you sign a property contract, you may have a legal safety net: the cooling-off period. It's a short window where you can change your mind and walk away from the purchase without major consequences. For many first home buyers, this safety net is the only thing standing between them and a purchase they later regret.

James, a first-time buyer in Brisbane, learned this the hard way. After signing a contract on a Saturday afternoon in November 2024, he discovered major termite damage during Monday's building inspection—damage the vendor hadn't disclosed. Fortunately, Queensland's 5-day cooling-off period gave him the breathing room to withdraw, costing him just 0.25% of the purchase price ($1,125 on his $450,000 offer). Without it, he would have been locked into buying a property needing $40,000+ in repairs.

But here's what many buyers don't realize: the cooling-off period is limited, varies significantly by state, and doesn't apply in all situations. Miss your deadline by a day, and you lose it forever. Not understand the exceptions, and you might think you have protections you don't actually have.

This guide explains everything first home buyers need to know about cooling-off periods: what it is, when it applies, what it costs, and how to exercise it—across all Australian states and territories.

What Is a Cooling-Off Period?

A cooling-off period is a specific timeframe during which a buyer can legally withdraw from a property purchase without facing significant financial penalties. It's designed to protect consumers and give them time to fully consider their decision before a contract becomes binding.

Think of it as a brief pause button rather than a full rewind. You can exit, but there's often a modest cost to do so. This is the perfect time to arrange your building and pest inspection and have your conveyancer review the contract.

Cooling-Off Periods by State: The Complete Picture

📋 Quick Reference Table

*Can request in WA, but not statutory

New South Wales (NSW)

The Basics

• Duration: 5 business days
• Penalty: 0.25% of purchase price
• Applies to: Residential property (except auctions)
• Can be waived: Yes, via Section 66W certificate (risky!)

How It Works

The cooling-off period begins when you sign the contract, not when the seller signs. Five business days means weekdays only—weekends and public holidays don't count.

The Penalty

If you exercise your cooling-off rights, the seller can deduct 0.25% of the purchase price from your deposit as a penalty fee.

Example: On a $600,000 property, the penalty is $1,500.

Special Circumstances

• Off-the-plan properties: 10 business day cooling-off period (not 5)
• Auctions: No cooling-off period
• Properties over 2.5 hectares: Exempt from cooling-off
• Corporate buyers: Generally no cooling-off

Key Consideration: Section 66W Certificate

Many buyers in competitive NSW markets are asked to waive their cooling-off period by signing a Section 66W certificate. This makes the contract immediately binding. Only do this if:

• You've had independent legal advice
• You've completed all due diligence
• You're confident in your purchase
• You understand the risks

Queensland (QLD)

The Basics

• Duration: 5 business days
• Penalty: 0.25% of purchase price
• Applies to: Residential property (except auctions)
• Can be waived: Yes, by written agreement

How It Works

The cooling-off period begins the day AFTER the buyer receives a copy of the fully signed contract. It ends at 5:00pm on the final business day.

Key difference from NSW: In Queensland, it's the day after you receive the contract, not the day you sign it.

The Penalty

Same as NSW: 0.25% of the purchase price.

REIQ Contracts

Queensland uses standard REIQ (Real Estate Institute of Queensland) contracts. These typically include building and pest inspection clauses, which is good for buyers.

Special Circumstances

• Auctions: No cooling-off period
• Properties over certain size thresholds: May be exempt
• Corporate buyers: Generally no cooling-off
• Waiving cooling-off: Can be done with written agreement

Victoria (VIC)

The Basics

• Duration: 3 clear business days
• Penalty: $100 or 0.2% of purchase price (whichever is greater)
• Applies to: Residential property (except auctions)
• Can be waived: No—cannot be contracted out of

How It Works

The cooling-off period begins when YOU sign the contract, not when the seller signs. "Clear business days" means you don't count the day you signed.

Example: If you sign on Wednesday, Day 1 is Thursday, Day 2 is Friday, Day 3 is Monday (weekend doesn't count).

The Penalty

The penalty is $100 or 0.2% of the purchase price, whichever is greater.

Example:

• On a $400,000 property: 0.2% = $800, which is greater than $100, so you pay $800
• On a $50,000 property: 0.2% = $100, so you pay the flat $100

Special Circumstances

• Auctions: No cooling-off period
• Properties within 3 days of auction: No cooling-off
• Properties over 20 hectares used for farming: No cooling-off
• Commercial/industrial property: No cooling-off
• Cannot be waived: Unlike NSW/QLD, Victoria doesn't allow cooling-off waiver

Important: Timing Is Critical

Your cooling-off period starts when you sign, even if the seller hasn't signed yet. If the seller doesn't sign for several days, you've already lost several days of your 3-day window.

South Australia (SA)

The Basics

• Duration: 2 clear business days (shortest in Australia!)
• Penalty: Usually NONE (unlike other states)
• Applies to: Residential property (except auctions)
• Can be amended: By written agreement

How It Works

The cooling-off period begins when you RECEIVE Form 1 (the vendor's statement), not when you sign the contract.

Key difference: This makes timing unpredictable. If you receive Form 1 after signing, your clock starts then.

The Penalty

South Australia's major advantage: Usually NO penalty. You typically forfeit only your holding deposit (maximum $100).

This makes SA much more buyer-friendly than other states.

Form 1 Vendor Statement

The cooling-off period timing depends on when you receive Form 1:

• Received before contract signed: Cooling-off starts when contract exchanged
• Received after contract signed: Cooling-off starts when you receive Form 1

Special Circumstances

• Auctions: No cooling-off period
• Corporate buyers: Generally no cooling-off
• Agreements between parties: Can extend or waive cooling-off

Australian Capital Territory (ACT)

The Basics

• Duration: 5 business days
• Penalty: 0.25% of purchase price
• Applies to: Residential property (except auctions)
• Can be amended: By written agreement

How It Works

Similar to NSW. The cooling-off period begins when you sign the contract, ends at 5:00pm on the final business day.

The Penalty

Same as NSW/QLD: 0.25% of the purchase price.

Special Circumstances

• Auctions: No cooling-off period
• Waiving cooling-off: Can be done with written agreement
• ACT-specific contracts: Conveyancer should understand these

Northern Territory (NT)

The Basics

• Duration: 4 business days
• Penalty: NONE (unlike southern states)
• Applies to: When conveyancer not involved in contract exchange
• Can be amended: By written agreement

How It Works

The cooling-off period applies when contracts are exchanged through agents rather than solicitors/conveyancers.

If a conveyancer is involved, the cooling-off period may not apply.

The Major Advantage

NO PENALTY FOR COOLING OFF - Unlike every other state, NT allows you to cool off with no financial penalty. Your deposit is refunded in full.

This is unique and very buyer-friendly.

Special Circumstances

• Auctions: No cooling-off period
• Corporate buyers: Generally no cooling-off
• Agent vs. conveyancer exchange: Affects whether cooling-off applies

Western Australia (WA)

The Basics

• Duration: None (no statutory cooling-off period!)
• Can request one: Yes, ask your conveyancer to include it
• Applies to: Only if added to contract
• Penalties: Vary based on agreement

How It Works

Western Australia has NO statutory cooling-off period. This means:

• Once you sign, you're locked in
• Your only safety net is the contract conditions you negotiated
• You MUST get thorough due diligence done BEFORE signing

What You Should Do

1. Get building and pest inspection BEFORE offer (no safety net after)
2. Request cooling-off clause: Ask your conveyancer to add one (not guaranteed to be accepted)
3. Include contract conditions: Subject to finance, building inspection, etc.
4. Be thorough: Everything must be checked before signing

How to Negotiate a Cooling-Off Period

You can ask the seller to agree to a cooling-off period. Common terms:

• 5 business days (matching other states)
• 0.25% penalty (matching other states)

But the seller can refuse, especially in a strong market.

Tasmania (TAS)

The Basics

• Duration: None (no statutory cooling-off period!)
• Can request one: Yes, but not common
• Applies to: Only if added to contract
• Key requirement: Pre-purchase inspection essential

How It Works

Tasmania has NO statutory cooling-off period. Once you sign, you're committed, similar to an auction.

What You Should Do

1. Get building and pest inspection BEFORE offer (absolutely essential)
2. Arrange thorough pre-purchase checks: No safety net after signing
3. Use contract conditions: Subject to finance, building inspection, etc.
4. Request cooling-off clause: Can ask but not guaranteed

Regional Considerations

• Limited inspector availability: Book early
• Low termite risk: Reduces pest inspection urgency (but still do it)
• Conveyancer involvement: Critical since no statutory cooling-off

When Cooling-Off Does NOT Apply (All States)

Regardless of state, cooling-off rights typically don't apply to:

1. Auction purchases: Once you bid successfully, you're committed
2. Properties within 3 days of auction: Before or after (most states)
3. Corporate buyers: Companies generally don't get cooling-off
4. Commercial/industrial property: Only residential gets cooling-off
5. Large rural properties: Thresholds vary by state (e.g., 20+ hectares in Victoria)
6. When previously entered same contract: If you already cooled off on this property
7. If specifically waived: Via certificate or written agreement

How to Exercise Your Cooling-Off Rights

Step 1: Make the Decision

You need to decide quickly. Your cooling-off period (2-5 days depending on state) passes fast.

Step 2: Write a Notice

You must provide written notice to the seller or their representative. The notice must include:

• Your name and contact details
• The property address
• The date you're exercising cooling-off
• Your signature

Email or formal letter both work, but ensure you have proof of delivery.

Step 3: Deliver the Notice

Deliver to:

• The vendor (seller), OR
• The vendor's agent, OR
• The address for service specified in the contract

Important: Some states specify you must deliver to the vendor directly, not just the agent. Check your state's requirements.

Step 4: Keep Proof

Keep:

• A copy of the notice you sent
• Proof of delivery (email read receipt, registered mail receipt, screenshot)
• The signed contract

This is your evidence if there's any dispute.

Step 5: Arrange Refund

Your deposit should be refunded (minus the cooling-off fee where applicable) within the timeframe specified in your contract, typically 10-14 business days.

The Cooling-Off Clock: How to Track It

To ensure you don't miss your deadline, track your cooling-off period carefully.

State-by-State Clock Examples

NSW (5 days from when you sign):

• Signed Thursday
• Day 1: Friday
• Day 2: Monday (weekend doesn't count)
• Day 3: Tuesday
• Day 4: Wednesday
• Day 5: Thursday
• Deadline: End of Thursday

Victoria (3 clear days from when you sign):

• Signed Wednesday
• Day 1: Thursday
• Day 2: Friday
• Day 3: Monday (weekend doesn't count)
• Deadline: End of Monday

South Australia (2 days from when you receive Form 1):

• Received Form 1 on Tuesday
• Day 1: Wednesday
• Day 2: Thursday
• Deadline: End of Thursday

Pro Tip: Mark Your Calendar Immediately

On the day you sign, immediately:

1. Calculate your deadline
2. Enter it in your phone calendar with a reminder for Day 2
3. Share it with your conveyancer and partner/spouse
4. Set aside time on Day 2 to review everything

What to Do During Your Cooling-Off Period

Your cooling-off window (2-5 days depending on state) is your time to make sure you're making the right decision. Here's what to focus on:

Get Your Building and Pest Inspection Done

Schedule and complete this early—ideally by Day 1 or 2. You need the report by Day 2 at the latest to have time to review it.

Review Your Conveyancer's Advice

Your conveyancer should contact you within 24-48 hours with their initial review. Discuss:

• Any unusual clauses
• Any title issues
• Any required searches
• Your legal obligations
• Your options if issues arise

Review the Property

Consider:

• Visit the neighborhood at different times (morning, evening, weekend)
• Check noise levels and traffic
• Think about whether you're comfortable with the property's condition
• Revisit your decision to buy

Verify Your Finances

Confirm:

• Your mortgage pre-approval is still valid
• You can still afford this property
• You have funds for additional costs (inspection, legal, moving)
• Your financial situation hasn't changed

Make Your Decision

By end of Day 2, you should know if you want to proceed or cool off.

Important: Don't Confuse Cooling-Off with Contract Conditions

Your cooling-off rights are separate from contractual conditions like:

• "Subject to finance"
• "Subject to building and pest inspection"
• "Subject to satisfactory strata report"

These conditions:

• Run for as long as the contract specifies (often 14 days)
• Give you specific grounds to renegotiate or withdraw
• Are different from statutory cooling-off rights

Key point: Once your cooling-off period expires, you can't use it as an escape route. You rely on the contract's conditions instead.

Can You Waive Your Cooling-Off Rights?

In most states (except Victoria), you CAN waive your cooling-off rights to make your offer more attractive to the seller. This creates an "unconditional" offer.

When Sellers Prefer Waived Cooling-Off

• In hot markets where properties are competitive
• When multiple offers are on the table
• When sellers want certainty

Why You Should Be Cautious

• You remove your safety net
• You can't change your mind without major consequences
• You're betting everything on your decision in that moment

A Better Approach

Instead of waiving cooling-off outright:

1. Negotiate favorable contract conditions (building and pest, finance)
2. Do thorough due diligence BEFORE making your offer
3. Get your conveyancer to review everything before you sign
4. Only waive cooling-off if absolutely necessary to secure the property

What Happens If You Don't Cool Off?

If you don't exercise your cooling-off rights by the deadline, the contract becomes fully binding. At that point:

• You must proceed with the purchase
• You can only withdraw if a contract condition is triggered (e.g., failed inspection, mortgage rejection)
• You could face legal action from the seller if you don't complete the sale
• You'll lose your deposit

This is why many conveyancers advise: "Cooling-off is a first-aid kit, not a safety measure. Don't sign anything without getting legal advice first."

Your Cooling-Off Checklist

Before You Sign:

• You understand what you're signing
• Conveyancer has reviewed the contract
• You've identified your cooling-off deadline
• You have a plan for your cooling-off period

On Signing Day:

• Keep a copy of the signed contract
• Note the exact date you signed
• Calculate your deadline (note it down clearly)
• Contact your conveyancer and building inspector immediately

During Cooling-Off Period (Days 1-2):

• Building and pest inspection scheduled
• Conveyancer review completed
• Reports received and reviewed
• Decision made: proceed, negotiate, or cool off?

Before Deadline:

• If cooling off: draft and deliver written notice
• Keep proof of delivery
• Contact seller/agent to confirm receipt
• Arrange deposit refund

Common Questions About Cooling-Off

Q: What if I want to cool off but my partner doesn't?

Both parties must be in agreement. If only one person signed the contract, only they can exercise cooling-off for their share. Consult with your conveyancer about your options.

Q: What if I miss the deadline by a few hours?

The deadline is firm. Courts have ruled against buyers who missed it by even a few hours. Your only option would be to seek legal remedy, which is expensive and uncertain.

Q: Can the seller refuse to refund my deposit?

If you exercise cooling-off correctly (written notice within deadline), the seller must refund your deposit minus the cooling-off fee (where applicable). They can't refuse.

Q: What if there's a dispute about the cooling-off notice?

This is why proof of delivery is critical. If you can't prove the seller received written notice within the deadline, you could lose your cooling-off rights. Send via registered mail or email with read receipts.

Q: Does cooling-off apply to off-the-plan properties?

Typically yes, but with some exceptions. NSW off-the-plan has 10 days instead of 5. Check your specific contract and state requirements.

Q: What states have no cooling-off?

Western Australia and Tasmania have no statutory cooling-off periods. You can request one be added to the contract, but it's not automatic.

Key Takeaways

• Know your state's rules: Cooling-off periods vary from 0 to 5 days
• Know your penalty: Ranges from nothing (NT, SA usually) to 0.25% (NSW, QLD, ACT)
• Mark your calendar: Three business days passes very fast
• Start when YOU sign: Not when the seller signs (important distinction)
• Check auction rules: No cooling-off at auctions in any state
• Get it in writing: Written notice only
• Act early: Don't wait until Day 3
• Know your exceptions: Doesn't apply to auctions, corporate buyers, commercial property
• Understand your state's specific rules: Each state has nuances

The cooling-off period is there to protect you. Use it wisely, but plan so you don't need to use it.

Next Steps

1. Identify which state you're buying in
2. Note your specific cooling-off period and penalty
3. When you sign a contract, immediately calculate your deadline
4. Mark it clearly in your calendar with a Day 2 reminder
5. Contact your conveyancer and building inspector on signing day
6. Use your cooling-off days to thoroughly review your decision
7. If cooling off, deliver written notice well before your deadline

Understanding your cooling-off rights is crucial. For the legal side of your purchase, read our complete guide to choosing a conveyancer and understanding vendor statements, or check out the complete first home buyer checklist.