NSW cooling-off period and 66W certificate

When you buy a home in NSW by private treaty, you usually get a 5 business day cooling-off period after contracts are exchanged. If you pull out during that time, you pay the seller 0.25% of the price, and there's no cooling-off at all if you buy at auction or sign a 66W certificate.

The cooling-off period is a safety net, not a substitute for checking the property before you exchange. Here's how it works and when it doesn't apply.

How the cooling-off period works

For residential property in NSW:

• The cooling-off period is 5 business days after the day contracts are exchanged.
• It ends at 5pm on the fifth business day. Weekends and public holidays don't count.
• During that time you can rescind (cancel) the contract for any reason, by giving the seller written notice the way the contract says.
• If you rescind, you forfeit 0.25% of the purchase price to the seller. That's $250 for every $100,000, so $2,500 on a $1 million home.

For off-the-plan contracts (buying a property before it's built or registered), the cooling-off period is 10 business days.

The seller doesn't get a cooling-off period. Once contracts are exchanged, they're bound.

When there's no cooling-off period

There's no cooling-off period if:

• You buy at auction.
• You exchange contracts on the same day as an auction after the property was passed in.
• You give the seller a section 66W certificate.

What a 66W certificate is

A 66W certificate (named after section 66W of the Conveyancing Act 1919) is signed by your solicitor or conveyancer. It confirms they've explained the effect of the contract to you and that you're waiving your cooling-off rights. Once it's given, the contract is binding from exchange.

Sellers and agents often ask for a 66W in a competitive market, because it gives them certainty. It can help you win a property, but it means everything has to be checked before you exchange: finance, the building and pest inspection, the strata report and the contract itself.

The deposit during cooling-off

On exchange you pay a deposit, commonly 10% of the price. Many contracts allow a smaller amount during the cooling-off period, often 0.25%, with the balance due when cooling-off ends. If you pull out during cooling-off, the seller keeps 0.25% of the price and the rest of what you've paid is refunded.

Check the deposit terms in the contract with your solicitor or conveyancer, including whether a deposit bond or bank guarantee is accepted.

What to do during the 5 days

If you exchange with a cooling-off period, use it. The 5 days go quickly.

• Confirm your finance. Make sure your lender's approval is formal, not just pre-approval, and that the valuation has come in.
• Get the building and pest inspection done if you haven't already, and read the full report, not just the summary.
• For apartments, read the strata report. Look for special levies, defects and disputes. See our guide to NSW strata report red flags.
• Have the contract reviewed. Special conditions can shift risk to you. See contract special conditions in NSW.
• Check what's being built nearby. A development application next door can change views, sun and noise. See how to check DAs near a property.

If anything comes up, talk to your solicitor or conveyancer before 5pm on the last day.

Should you sign a 66W?

That's a decision for you and your solicitor. Signing one can make your offer stronger, but it removes your exit. Most problems that would make you walk away can be found before exchange if you get the documents early, so the safest path is to check everything first and only then consider waiving cooling-off.

Questions

Do weekends count in the NSW cooling-off period?

No. The cooling-off period is 5 business days, so weekends and public holidays aren't counted. It ends at 5pm on the fifth business day after exchange.

How much does it cost to pull out during cooling-off?

You pay the seller 0.25% of the purchase price. On a $1.2 million home that's $3,000.

Is there a cooling-off period at auction in NSW?

No. There's no cooling-off period if you buy at auction, or if you exchange on the same day as an auction after the property was passed in.

Can the seller pull out during the cooling-off period?

No. Only the buyer has a cooling-off right. Once contracts are exchanged, the seller is bound.

Who signs the 66W certificate?

Your own solicitor or conveyancer signs it, after explaining the contract and the effect of waiving cooling-off to you.

Keep reading

• First home buyer checklist for NSW
• Buying a tenanted property in NSW: what to check
• What to look out for when buying a property in NSW
• Property due diligence in NSW: the full checklist

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