Stephen Teale | April 2012 | Corporate & Commercial
Residential purchasers are now able to seek pre-contract legal advice without waiving their three clear business day cooling off rights.
Who does this impact? Vendors and purchasers of Victorian residential real estate.
What action should be taken?
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Cooling off rights for Victorian residential property purchasers
All parties to Victorian residential real estate contracts should be aware of the change in purchaser cooling off rights. The passing of s59(b) of the Consumer Affairs Legislation Amendment (Reform) Act 2010 has amended s31(5) of the Sale of Land Act 1962 (SLA), to now allow purchasers of Victorian residential real estate to exercise cooling off rights after receiving pre-contract legal advice. The amendment is operative as from 1 March 2012.
Background Under s31 SLA, a purchaser who signs a contract for the purchase of residential real estate, can at any time before the end of three clear business days, give notice of termination to the vendor, (subject to the exceptions in s31(5) SLA). Prior to the legislative change, a purchaser who received independent legal advice from a solicitor before signing the contract, could not take advantage of the cooling off rights available under s31(5) SLA. Section 31(5)(e) SLA has now been repealed, thus allowing purchasers of residential real estate to obtain pre-contract legal advice without fear of losing their cooling off rights.
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Following the legislative amendment, the three clear business day cooling off period is now not available if; >> The purchaser bought the property at or within three clear business days before or after a publicly advertised auction; >> The property is used primarily for industrial or commercial purposes; >> The property is more than 20 hectares in size and is used primarily for farming; >> The purchaser and the vendor have previously signed a contract for the sale of the same land in substantially the same terms; or
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Cooling off rights for Victorian residential property purchasers Stephen Teale | April 2012
>> The purchaser is an estate agent or a corporate body. The penalty to be paid by a purchaser to the vendor for exercising their cooling off rights remains unchanged at the greater of $100.00 or 0.2 per centum of the purchase price of the property.
Conclusion Prudent purchasers of Victorian residential real estate will and should have real estate contracts checked by an experienced solicitor prior to signing. Given that the exercise of cooling off rights can be a costly exercise for the purchaser and an inconvenience for the vendor, the need to cool off could be avoided with proper advice and research.
For more information, please contact: Stephen Teale Partner T: 03 8600 5008 M: 0419 374 728 stephen.teale@turkslegal.com.au
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