The term 'Cooling Off Period' is used in a number of
areas in law. In this article, the term is dealt with as it applies
to the sale and purchase of residential real estate in New South
Wales.
This law has had the practical effect of countering
gazumping.
When a purchaser enters into a contract for the purchase of
residential real estate in New South Wales (exchange of contracts),
by law a 5 business days Cooling Off Period applies (or a 10
business days period in case of an 'off the plan purchase':
for example the purchase of a block of land in a subdivision to be
registered at a later time).
This means the purchaser has 5 or 10 business days (as the case
may be) to change their mind and withdraw from the contract. The
Cooling Off Period can be used by the purchaser to finalise finance
or attend to due diligence enquiries such as a pest or building
report.
