Cooling Off Periods in Victoria: What You Need to Know as a Buyer in Victoria

Buying a home is one of the biggest financial decisions you’ll make in your life, so understanding your rights and responsibilities is critical. In Victoria, the law provides buyers with a crucial consumer protection: the cooling off period. This short window gives purchasers the right to reconsider their decision, and withdraw from a property contract with minimal penalty. In our latest SE Lawyers blog from Melanie Heffernan, we’re exploring what you need to know about cooling off periods in Victoria and how to make the most of one.

First off, what is a ‘Cooling Off Period’?

The cooling off period is a legally mandated timeframe of three clear business days after a buyer signs a contract to purchase residential property. During this time, they can cancel the contract for any reason. The cooling off period is designed to give buyers time to reflect, seek advice from a trusted lawyer, arrange inspections, or secure finance before fully committing to the purchase.

When does the cooling off period start and end?

The cooling off period lasts for three days and begins on the business day after the buyer signs the contract. Keep in mind this doesn’t mean the day of signing, but the business day after. Business days exclude weekends and public holidays, meaning that if you signed your contract on Monday, the cooling off period begins on Tuesday and ends at midnight on Thursday.

If you are a buyer and have signed the contract, before providing it to the vendor to sign - and they haven’t done this yet - the clock will begin ticking regardless. The vendor's signature isn’t required for the cooling off period to begin, it is only the buyer’s signature that is necessary to kick off the timer on the cooling off process.

How do you exercise your cooling off rights?

If you are the buyer and you decide that would like to cancel the contract of sale, you’ll need to provide written notice to the vendor, their real estate agent, or their solicitor before the end of the third business day.

As for the written style of the notice, this doesn’t need to be in any special format, but needs to clearly state your intention to withdraw from the contract. After you have written your notice, delivery can be made in person, by email, or by leaving the notice at the address specified in the property contract.

Are there penalties for cooling off?

Yes, ending the contract under the cooling off period incurs a small penalty: the greater of $100 or 0.2% of the purchase price. For example on a $500,000 property, the penalty would be $1,000 (0.2% of the price), and the remainder of your deposit would be refunded.

When does the cooling off period not apply?

The cooling off period does not apply in the following situations:

● The property is purchased at a publicly advertised auction, or within three clear business days before or after an auction.

● The buyer is a corporate body (company) or an estate agent.

● The property is used primarily for industrial or commercial purposes.

● The property is more than 20 hectares and is used mainly for farming.

● The buyer has previously entered into a contract for the same property with the same vendor under similar circumstances.

What to consider as a buyer

Keep in mind that the cooling off period is a right that cannot be excluded from the property’s contract of sale, and any attempt to waive it is void. Unlike buyers, sellers don’t receive the right to a cooling off period; it is a protection given to buyers only. The best way to maximize this time is to make sure that you have arranged an inspection - such as a building and pest inspection - of the property, reviewed your finances and sought legal advice.

Because of the quick turnaround required, having completed these ‘must-do’s’ prior to the cooling off period commencing is best, as it means that you can make informed, confident decisions without the stress of time pressure.

Final thoughts

For those in Victoria, the cooling off period is a vital safety net when you are buying property. It gives you the chance to pause and reconsider this major commitment before moving ahead with confidence. That said, this period is brief, and comes with specific rules and exceptions that you’ll need to understand properly. With the support of our property team, we can explain every step, and give you advice that avoids costly mistakes and offers you peace of mind in your property journey. Ready to chat about your property contract? Reach out to SE Lawyers here.