What is a ‘Cooling-off Period’?
When you purchase a property by private treaty* in the ACT, the Contract for Sale has a provision allowing the Buyer the right to a “Cooling-Off Period”.
This is a period of time (5 business days) following exchange of Contracts where the Buyer has the right to cancel the Contract by serving notice on the Seller and paying a Cooling-off fee of 0.25% of the Purchase Price. One purpose of this is to allow a Buyer time to step back and reflect on their purchase after exchange.
What is a Section 17 Certificate?
A Section 17 Certificate is a certificate which waives the Buyer’s right to the Cooling-Off Period. It is signed by a solicitor after they have provided advice to the Buyer on the nature of the certificate. This means that on exchange, the Contract is deemed to be ‘unconditional’, so all parties are effectively locked in to settle.
Why is the agent asking me for one?
Sellers requesting a Section 17 Certificate has become the norm. Almost every private treaty transaction these days involves the Buyer providing the Seller with a Section 17 Certificate.
Due to the nature of the property market, Seller’s seek assurances that a Buyer is 100% committed to buying their property. Seller’s want to know the deal is locked in, meaning they can stop marketing the property and instead put their focus into working towards settlement.
Are there risks involved?
There are risks involved in waiving your right to a Cooling-Off Period and exchanging unconditionally on a Contract. You must be certain you are satisfied with the condition of the property, happy with the terms of the Contract, and have your finances in place to settle on the due date.
If you have been asked to provide a Section 17 Certificate or would like advice on a Contract, we are here to help! Get in touch with our property team on:
*Private treaty is the sale of property not at Auction. Auction sales DO NOT provide the Buyer with a Cooling-off Period.