A: Property is sold in New South Wales either WITH or WITHOUT a cooling off period. If you've been asked to pay a 0.25% deposit, you are being asked to purchase with a cooling off period. This is called anti-gazumping legislation. Why?
The Vendor's perspective... When a Buyer makes an offer it is no guarantee that they will purchase the property. You are keen to see the Buyer is serious. Your marketing campaign will lose momentum if the property is taken off the market while the Buyer conducts building and pest inspections and finalises their mortgage arrangements. It will be costly and time consuming to revive the campaign if the Buyer doesn't proceed. A "cooling off period" gives you the right to keep 0.25% of the agreed price as compensation if the purchaser pulls out of the deal in the first few days after seeing the property.
The Purchaser's perspective... When a Vendor accepts your offer it is no guarantee that they will sell you the property. You want to secure the property, especially since you are spending good money on building and pest inspections and loan applications. You will be in even more of a hurry if there is simply no other property on the market that can match your unique list of requirements as closely as this property can. The Vendor can withdraw the property from market at ANY TIME prior to Exchange of Contracts. They can also accept higher offers, even after your offer has been accepted.
How does it work?
Shortly after the offer is accepted,
- The Vendor signs the Contract for the Sale of Land
- The Purchaser signs the Contract for the Sale of Land
- The Purchaser pays 0.25% of the agreed price to the agent
- The Contracts are dated (sometimes the sales agent will do this)
Please remember this advice applies to New South Wales Residential property only. To confirm your particular circumstances, please contact Liberty Conveyancing
Posts
