If you are looking at buying Sydney property it is essential to make sure that you have made all relevant enquires and you have your finance finalised before locking yourself into a contract. After all it is some of the most expensive real estate in Australia. Gazumping is always forefront on a purchasers mind and it can be tempting to take shortcuts to beat out other buyers.
This is where a cooling off period can come in handy. The NSW Law Society Standard Terms and Conditions of a Contract of Sale and Purchase provides that a purchaser can pull out of a contact for any reason up to five days after entering into that contract so long as the property was not purchased at auction. If you have not firmed up your finance or you are waiting on a building and pest report but you want to exchange a contract to avoid gazumping, the cooling off period provides an easy way out of the contract should you need it. Like everything rescinding under cooling off comes at a cost, being 0.25% of the purchase price straight into the vendor’s wallet, so you should always go into the contract with the intention of completing it.
However, it is likely that once you have come to an agreement to purchase a property, the vendor will require you to provide a 66W certificate in which you waive your cooling off rights. Unless you negotiate the special conditions in the contract to give you more time to satisfy a particular enquiry, it is likely that once you exchange contracts you are locked in. The vendor can require the provision of a 66W certificate to be a condition of exchange so if you are running out of time to make your enquiries it can be tempting to think that finance will be okay or the building seems solid enough not to require a building inspection. Instead you cross your fingers that all will be fine. But when buying Sydney property, taking a short cut can become a very expensive mistake. Imagine forfeiting your 10% deposit because you have entered into a contract having waived your cooling off rights under a 66W Certificate only to find out that the bank won’t lend you enough money ultimately forcing you to terminate the contract… ouch!
Long story short, the cooling off period is a nice safety net but with the increasing demand for purchasers to provide 66W certificates waiving this right, it is not a given. If you are looking at buying Sydney property, crossing t’s and dotting i’s in the beginning of the purchase process is essential for a stress free, successful contract period and settlement.
If you are in the market for buying Sydney property and want to be on the front foot contact us for a confidential discussion and advice.