Most purchasers of property in South Australia have a statutory right to terminate a Contract for the sale of land (‘cool off’).
A purchaser exercising that right must give written notice of the ‘Cooling-off’ to the vendor within two clear business days after:
- The contract was made (if you received the Form 1 prior to making the contract) or
- The Form 1 was given to you (if you received the Form 1 after making the contract)
The right to ‘cool off’ does not exist if:
- You have waived your right by getting independent legal advice and have a certificate from the legal practitioner to that effect
- You bid at auction and were successful or purchased the property later that day
- A company is the purchaser
- In certain circumstances where the sale involves a tender or option to purchase
- The purchaser is buying a business plus the property
What does 'Waiving your right to cool off' mean?
This means you are giving up this right. You should be careful about waiving your rights to cool off if you have not received all the information that would be included in the Form 1.
If you want to exercise your right to ‘cool off’, you give written notice of this intention to the vendor before the end of the cooling off period. You don’t need to provide any reason for cooling off.
Leanne and Simon sign a contract for the sale of land. The Form 1 is given to them personally by the agent the day after the contract was signed. This date was Thursday 5 July 2018.
This means that Leanne and Simon have two clear business days to cool off. Because the cooling-off commenced on a Thursday and Saturday and Sunday are not regarded as business days, they have until midnight on Monday 9 July to cool off. Friday is the first clear business day and Monday is the second clear business day.
Leanne and Simon must give a written notice of the ‘Cooling-off’ to the vendor if they wish to ‘cool off’. In this case, it would have to occur before midnight on Monday 9 July.
When are you bound by a contract for the sale of land?
You are bound by the Contract from the time that your offer to purchase is accepted by the vendor. Unless you legally cool off, you are obliged to try to fulfil the special conditions and ultimately finalise the settlement. There are various financial consequences for you (including default interest and even loss of deposit and payment of the difference in price on resale) if you fail to comply with the terms of the Contract.
What are special conditions?
A contract for the sale of land may contain special conditions. These conditions are included to protect the parties. Your conveyancer can assist you to draft special conditions.
Common special conditions include making the contract ‘subject to finance’ of ‘subject to the sale of the buyer’s property’.
A special condition regarding finance protects the purchaser as it will provide that the contract is subject to the purchaser applying for and obtaining a loan for a particular amount from a particular financial institution by a particular date.
If the purchaser is unsuccessful in fulfilling the condition the contract will not proceed. Similarly, with a contract made subject to the sale of the purchaser’s property by a certain date for not less than a fixed sale price. If this condition is not satisfied the contract for sale will not proceed.
AICSA Members are your trusted professionals.