Misunderstanding this can result in contractual issues and buyer withdrawal.

Updated 1 November 2026

Contract for Sales - Seller’s Most Asked Questions #17: What is a cooling-off period?

What is a cooling-off period in NSW?

A cooling-off period gives a buyer a limited statutory right to rescind a residential property sale contract after exchange. In NSW, the usual period is five business days, or ten for a qualifying off-the-plan contract. Exceptions apply, and ordinary cooling-off rescission generally costs the buyer 0.25% of the purchase price.

The buyer does not need to prove a defect or justify a change of mind. For sellers, exchange creates a binding transaction subject to this right and any other applicable conditions. NSW Government guidance explains the distinction between exchanging contracts and the later settlement.

When does the cooling-off period start and finish?

Cooling off starts when the contract is made, usually on exchange, and ordinarily ends at 5 pm Sydney time on the fifth business day after that day. For a qualifying off-the-plan contract, the deadline is the tenth business day. Signing a document alone does not necessarily establish that exchange has occurred.

Exclude Saturdays, Sundays and public or bank holidays throughout NSW when counting business days. For example, a Tuesday exchange normally produces a deadline of 5 pm the following Tuesday, assuming no intervening holiday. Obtain written confirmation of the actual deadline, including any agreed extension.

Which property sales have cooling-off rights?

Cooling-off protection depends on the statutory definition of residential property and the circumstances of the sale. An ordinary private-treaty purchase commonly qualifies, while auction sales and certain other transactions do not. Sellers and buyers should have the contract checked before assuming that a residential address guarantees a cooling-off period.

Section 66Q of the Conveyancing Act 1919 contains dwelling and use requirements and excludes land exceeding 2.5 hectares. A newly built home is not necessarily an off-the-plan purchase; the statutory definition concerns a residential lot to be created by registration of a plan.

Who signs a section 66W certificate?

An independent solicitor, barrister or licensed conveyancer signs the section 66W certificate after explaining the contract, the certificate and the effect of giving it. The buyer does not personally certify these matters. A complying certificate given at or before exchange removes the statutory cooling-off period for that sale contract.

The seller’s solicitor and specified associated practitioners cannot provide this independent certification. A seller can request a certificate, but the buyer should obtain advice and complete necessary investigations before authorising its delivery. Waiving cooling off does not remove every separate condition or statutory protection.

Can the cooling-off period be extended or shortened?

The cooling-off period can be extended through the contract or by the seller’s written extension before it expires. Shortening the period requires compliance with section 66S, including a section 66W certificate; an informal agreement alone is insufficient. Record the precise new expiry date and time through the parties’ legal representatives.

If finance or inspection results are outstanding, the buyer should request an extension early. A request does not itself extend the deadline. Sellers can assess the proposed length and reasons, but neither party should treat silence or continuing negotiations as an agreed extension.

How does a buyer validly exercise cooling-off rights?

The buyer must serve a signed written rescission notice within the applicable period and before completion. Section 66U specifies who must sign, who can receive the notice and permitted service methods. A telephone conversation or an assumption that an email was effective is not a reliable substitute for compliant service.

For joint buyers, each buyer or their respective legal representative must sign as required. The seller, their solicitor or their agent may receive service under the legislation. Have a lawyer check the notice, contractual service provisions and evidence of delivery; do not leave these steps until the final minutes.

How much does cooling-off rescission cost?

Ordinary statutory cooling-off rescission results in forfeiture of 0.25% of the purchase price, rather than 0.25% of the deposit. The seller can recover that amount from the deposit, with the balance refunded to the buyer. Any unpaid shortfall is recoverable, although the seller may waive the forfeiture altogether.

For a $1.2 million purchase, the usual forfeiture is $3,000. If the buyer paid a $120,000 deposit, $117,000 is refundable. This is an illustrative calculation. Separate liabilities preserved by the legislation, including certain possession-related claims, may require additional advice.

Can the seller withdraw during the buyer’s cooling-off period?

The seller has no equivalent statutory cooling-off right. Once contracts are exchanged, the seller remains bound unless a separate lawful basis permits withdrawal. A higher offer, a change of plans or concern about the buyer’s intentions does not itself release the seller from the existing contract or justify another binding sale.

Likewise, the seller’s financial hardship does not defeat a buyer’s valid cooling-off notice. Refer any notice promptly to your lawyer and obtain confirmation of the contract’s status before committing to another purchaser.

What checks should buyers complete before the deadline?

Buyers should arrange contract review, finance confirmation and appropriate property investigations before exchange wherever possible. If cooling off remains available, use that time to resolve outstanding issues promptly. Loan pre-approval does not guarantee final approval, and booking an inspection does not suspend the cooling-off deadline while the report is prepared.

The Law Society’s buying guidance supports early legal review. Check building and pest reports, strata records where relevant, title restrictions and the lender’s requirements. Sellers can assist by arranging reasonable inspection access and responding promptly to their lawyer’s requests for documents.

What happens when the cooling-off period expires?

After a valid cooling-off period expires, the buyer loses that ordinary statutory exit right. The parties must perform the contract unless another contractual or legal right applies. Finance refusal alone usually does not permit withdrawal from an unconditional purchase, and default can expose the buyer to deposit loss and further damages.

Expiry does not automatically satisfy outstanding special conditions or justify early release of the deposit. Off-the-plan protections, for example, require deposits to remain protected in trust until settlement. Ask your lawyer to identify any continuing conditions and obligations.

What changed about cooling-off notices in 2026?

Residential sale contracts exchanged from 1 June 2026 must contain the updated prescribed cooling-off notice. The transition allowing the previous form ended on 31 May 2026. Sellers should have their lawyer check the actual contract documents, because using an outdated template can create avoidable uncertainty about the buyer’s rescission rights.

The Registrar General’s guidance confirms the change. Under section 66X, missing the required statement can permit rescission before completion without the ordinary 0.25% forfeiture, even after cooling off expires. That provision does not apply where a section 66W certificate was given under section 66S or 66T; the contract is not automatically void.

What does BP7 v Gavancorp show about option contracts?

In BP7 Pty Ltd v Gavancorp Pty Ltd [2021] NSWSC 265, the Supreme Court held that cooling-off rights applied to sale contracts arising from put options under the legislation then governing the transactions. Later legislative changes mean buyers should not assume that exercising a put option creates a fresh cooling-off period today.

The dispute concerned 14 Cronulla strata lots. The Court found that the purchaser validly rescinded and was entitled to option fees credited as deposits, less 0.25% of each price. It answered separate questions after the purchaser and owners settled, rather than awarding a damages figure.

The 2022 Regulation excluded cooling off for contracts arising from put options. Amendments commencing on 15 August 2025 brought put options expressly within the option-stage protections. Resulting contracts from put or call options generally have no fresh cooling-off period, subject to the statutory exception for an option void under section 66ZG.

How can sellers manage cooling off without unnecessary disputes?

Sellers should confirm the applicable period, document any waiver or extension and plan for the possibility of a valid rescission. Coordinate a related purchase around the actual legal and funding position. Clear records and prompt legal advice help prevent assumptions about deadlines, deposit access or replacement buyers from creating further contractual problems.

Keep the exchanged contract, certificate, written extensions and any notice together. Contact Christine Manolakos and CM Lawyers for advice on your sale contract, cooling-off obligations and the appropriate response if a buyer seeks to withdraw.

General information only, current at 1 November 2026. Have a lawyer check the contract, applicable deadline and any proposed waiver, extension or rescission before acting.

Key resources

• NSW Government guidance on contracts and deposits — exchange, cooling-off periods and the usual forfeiture.

• Conveyancing Act 1919 — residential property definitions, cooling-off rights, certificates and rescission notices.

• Interpretation Act 1987 — the statutory definition of a business day.

• NSW Registrar General guidance for practitioners — current option rules and the notice required from 1 June 2026.

• NSW Registrar General off-the-plan guidance — extended cooling off and deposit protections.

• Law Society guidance before buying a home — legal review and investigations before commitment.

• BP7 Pty Ltd v Gavancorp Pty Ltd [2021] NSWSC 265 — judgment on put options under the earlier legislation.

• NSW Registrar General explanation of the 2022 Regulation — the change affecting contracts arising from put options.

• Law Society contract FAQs — the 2026 contract and updated cooling-off notice.

• CM Lawyers — Selling a property — contract preparation and conveyancing for NSW sellers.