In New South Wales (NSW), whether you buy or sell a property there is a five day cooling off period before the contract becomes binding. This is of course after contracts have been exchanged. If the purchaser’s solicitor issues a section 66W certificate, the cooling off period can be relinquished as the contract can be immediately binded. The Conveyancing Act 1919 (NSW) regulates the cooling off period and relinquishing the cooling off period.
When Is A Section 66W Certificate Needed?
A standard cooling period in NSW lasts from the date of contract exchange to 5pm on the fifth business day after contracts have been exchanged. The cooling off period ensures the purchaser time to:
- Consider the purchase
- Undertake searches of the property
- Conclude financial agreements
A cooling off period does not apply to auctions, only to real estate purchased by private treaty. Once the auction is finalised, the contract is immediately binding or if a sale is negotiated.
Am I Able To Back Out Of The Property Sale?
If a purchaser decides to back out of the contract during the cooling off period, a penalty of 0.25% of the purchaser price is to be paid. This is if the purchaser does not provide a 66W Certificate. There is no cooling off period though if someone is backing out with a 66W is provided. This means the original contract details the penalisation. Typically penalties of this nature are 10% of the purchaser price, in addition you’re the difference between the offer and subsequent sale of the property. The difference in a penalty is decided whether or not a s66W Certificate is provided or not. It is important to understand an s66W Certificate before using it, seeking legal advice in this matter is paramount.
What Is In A Separation 66W Certificate?
A 66W must contain:
- The legal practitioners name and practice they work for
- A statement that the legal practitioner does not act for vendors
- A statement that the legal practitioner has clear discussed to the purchasers:
- The purpose and effect the contract has for the purchase of the property
- Nature of a Section 66W Certificate
- The effect of having no cooling off period
A five day cooling off period applies if you are buying a property in NSW and contracts have been exchanged. Before providing a s66W Certificate it is important to consider your finances and do a thorough inspection of the property. This cooling off period can be waived by providing an s66W Certificate. It is extremely important to understand that there is a penalty if you do not proceed.