When you buy a home in NSW, the cooling-off period is a short window of time after you exchange contracts that protects you from making a rushed decision. It allows you to pause, complete important checks, seek advice if issues arise, and cancel the contract if necessary, while remaining aware of the costs and steps involved. Knowing how this period works helps you move forward with confidence.
In NSW, the cooling-off period (when applicable) sets out its length, the rights of both buyers and sellers, the circumstances under which it can be waived or shortened, and the essential actions to take before it expires.
What Is a Cooling-Off Period
A cooling-off period is the short time frame after contracts are exchanged during which the buyer can cancel the contract for any reason. It applies to residential property purchases in NSW. The cooling-off period gives buyers a chance to slow down, organise finance, arrange inspections, and make sure they are comfortable before going ahead.
The cooling-off period is not the same as the settlement period. The settlement period is the longer stage between exchange and settlement, when the balance of the purchase price is paid, documents are finalised, final inspections are done, and ownership is transferred. The cooling-off period happens right at the start of this process and only lasts a few days.
When the Cooling Off Period Applies
In most private treaty sales of residential property in NSW, the standard cooling-off period is five business days. It usually starts on the day you exchange contracts and ends at 5.00 pm on the fifth business day. Weekends and public holidays do not count as business days. Sellers and buyers can also agree to extend the cooling-off period; however, this must be documented in writing.
The cooling-off period generally applies to residential property, such as houses, apartments, townhouses, villas, and similar dwellings. However, there are important exceptions:
- Auctions: There is no cooling-off period for properties sold at auction, because the sale becomes legally binding once the hammer falls.
- Auction day sales: If a property passes in at auction but is sold later that same day (or shortly after), no cooling-off period applies.
- Commercial property: Commercial sales are not covered.
- Rural or large land: Very large or rural properties may also be excluded in some cases.
In practice, your contract will state whether you have a cooling-off right. Your conveyancer or solicitor can confirm the exact start and finish times, ensuring you do not miss the deadline.
Buyer Rights During the Cooling Off Period
During the cooling-off period, the buyer has the right to cancel the contract. The legal term for this is to rescind the contract. You do not need to give a reason to use this right, but you must follow the correct process and act before the deadline.
How to exercise this right:
- Prepare a written notice stating that you are exercising your right to rescind the contract under the cooling-off period.
- Serve the notice correctly. The contract will specify who is required to receive it (typically the seller or the seller’s legal representative). Your conveyancer or solicitor will normally send the notice by email and another approved method to ensure it is valid and on time.
- Keep records. Note the date, time, and recipient of the notice, and keep proof of delivery (such as an email receipt or courier confirmation). This protects you in the event of a dispute.
If you cancel during the cooling-off period, you will usually forfeit 0.25% of the purchase price to the seller. This fixed cost compensates the seller for taking the property off the market. The rest of your deposit should be refunded. For example, if the purchase price is $1,000,000, the forfeiture amount is $2,500.
Many buyers choose to pay only this 0.25% deposit at the exchange, with the balance of the full deposit payable once the cooling-off period ends. This can reduce the amount tied up while you complete your checks, but always confirm the deposit structure in your contract.
Waiving or Shortening the Cooling Off Period
A buyer can choose to waive the cooling-off right or request a shorter period. This is done through a document called a section 66W certificate. The certificate must be signed by the buyer’s conveyancer or solicitor, not the buyer personally. By providing this certificate, the buyer confirms that there is no cooling-off period. Once the certificate is given and contracts are exchanged, the buyer cannot change their mind and cancel under the cooling-off rights.
Why would a buyer waive the cooling-off period?
A seller might ask for it to secure an immediate and unconditional contract. A buyer may agree if they have already finished their due diligence, have unconditional finance approval, feel fully comfortable with the property, and want to strengthen their offer in a competitive situation. Sellers like it because it gives them certainty that the deal will not fall through.
The risks of waiving the cooling-off period
If a problem is found later or the financing falls through, the buyer cannot simply cancel. This may result in the loss of the full deposit and potential legal consequences. Before giving a section 66W certificate, you should:
- Speak with your conveyancer or solicitor.
- Confirm your finance is unconditional.
- Order and carefully review all inspections and reports.
- Ask every question you have about the contract and the property.
Shortening instead of waiving
It is also possible to shorten the cooling-off period rather than remove it completely. For example, you might agree to a two-business-day window instead of a five-business-day window. Your conveyancer or solicitor can negotiate this with the seller’s team and make sure the change is properly recorded in the contract
Seller Perspective
From a seller’s point of view, the cooling-off period is a time when the sale is not yet fully locked in. If the buyer rescinds during this window, the seller keeps the 0.25% amount and the property goes back on the market. In many cases, that amount does not cover the cost, time, and stress of a sale falling through, or the lost opportunity of other genuine buyers who moved on while the property was under contract. For this reason, sellers often prefer a contract that is unconditional, and may ask for a section 66W certificate.
Sellers should also recognise that many buyers need the cooling-off period to arrange finance, finalise building and pest inspections, or obtain a strata report. Allowing a reasonable period can increase the pool of serious buyers and may lead to a smoother, quicker sale overall. You can reduce risk by setting clear deadlines, ensuring all disclosure documents are ready, responding promptly to buyer queries, and maintaining open communication so the buyer feels confident proceeding, thereby ensuring the cooling-off period ends without surprises. Once the period has expired, the contract becomes binding and the risk of the sale collapsing is greatly reduced.
If you receive multiple offers, some with a cooling-off period and some without, weigh the overall strength of each offer. Price matters, but so does certainty of settlement. An offer with a shorter cooling-off period, unconditional finance, well-prepared, and reliable buyers may be stronger than a slightly higher offer that includes longer delays or multiple conditions. Discuss the options with your agent and your conveyancer or solicitor before deciding which offer to accept.
Practical Tips for Buyers
Use the cooling-off period wisely. Confirm your finance, order inspections straight away, and have your conveyancer review the contract in plain English so you understand what you are signing. If issues arise, decide early whether to proceed, renegotiate, or cancel before the deadline, and always seek advice from your conveyancer before making the final call.
Practical Tips for Sellers
Make the process smoother for buyers by preparing a clear contract, setting realistic timeframes, responding quickly to requests, and providing easy access for inspections. Buyers gain confidence when documents are complete and communication is open, which reduces the risk of delays or cancellations.
Conclusion
The cooling-off period provides buyers in NSW with a brief yet crucial window to confirm their decision, arrange financing, complete key checks, and seek advice before committing fully to a property. For sellers, it offers both opportunities and risks, as it can widen the pool of potential buyers while delaying complete certainty until the end of the period. Clear communication, complete paperwork, realistic deadlines, and flexibility when issues arise all help both sides move smoothly toward settlement.
At Strictly Conveyancing, we guide buyers and sellers through every step of the process with clear advice and practical support. We can assist you with understanding your cooling-off rights, reviewing contracts, preparing documents for sale, and guiding you through the settlement process. Our experienced team is here to give you confidence and certainty. Contact Strictly Conveyancing today to ensure your property transaction is handled with care from start to finish.
Frequently Asked Questions
How long is the cooling-off period in NSW?
In NSW, the cooling-off period for most residential property sales is five business days. It starts on the exchange date and ends at 5.00 pm on the fifth business day, unless the contract specifies a different period.
Does a cooling-off period apply to auctions?
No. Properties sold at auction in NSW do not have a cooling-off period. This also applies to properties sold to a bidder on the same day or shortly after the auction.
How do I cancel during the cooling-off period?
To cancel, you must provide written notice of rescission before the deadline to the person named in the contract, typically the seller or their agent. Your conveyancer should normally prepare and serve this notice correctly.
What is the cost of canceling during the cooling-off period?
If you cancel under the cooling-off period in NSW, you forfeit 0.25% of the purchase price to the seller. The remainder of your deposit will be refunded.
What is a section 66W certificate?
A section 66W certificate is a document signed by the buyer’s solicitor or conveyancer that waives the cooling-off right. Once given, the buyer cannot cancel the contract using the cooling-off period.
