If you validly terminate a contract under the cooling-off period, there is a termination penalty that the Seller may choose to impose.
What is the termination penalty?
In Queensland, the cooling-off termination penalty which a seller may impose on a terminating buyer is 0.25% of the purchase price.
Accordingly, if the purchase price is $1,000,000.00, the termination penalty would be $2,500.00.
The Seller can choose to not impose the penalty if they wish.
How is the termination penalty applied?
The Seller may deduct an amount no greater than the termination penalty amount from any deposit paid under the contract.
Using the same example as above, if you paid a $5,000.00 deposit, the $2,500.00 may be released to the Seller, and the remaining deposit of $2,500.00 will be released to you.
The Seller or seller’s agent must release the balance of any deposit paid to you within 14 days of terminating the contract (i.e. the deposit less the penalty of 0.25%).
If you aren’t sure about purchasing the property, we would recommend trying to negotiate a longer timeframe for the deposit due date, so that it is due after the cooling-off period, restricting the ability for the Seller to apply a termination penalty.
On the other hand, if you are selling your property, it is important for sellers and agents to ensure that a buyer pays their deposit as soon as required to do so.
How do I terminate my contract under the cooling-off period?
Relevant notice will need to be given to the Seller or their Solicitor before 5pm on the final day of the cooling-off period. If you need assistance terminating the contract, contact us and we can assist.
The information provided in this article is for general information and educative purposes in summary form on legal topics which is current at the time it is published. The content does not constitute legal advice or recommendations and should not be relied upon as such. Whilst every care has been taken in the preparation of this article, FC Lawyers cannot accept responsibility for any errors, including those caused by negligence, in the material. We make no representations, statements or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided on this website. FC Lawyers does not guarantee, and accepts no legal responsibility whatsoever arising from or in connection to the accuracy, reliability, currency, correctness or completeness of any material contained in this article. Links to third party websites or articles does not constitute any endorsement or approval of those sites or the owners of those sites. Nothing in this article should be construed as granting any licence or right for you to use that content. You should consult the third party’s terms and conditions of use in relation to any third-party content. FC Lawyers disclaims all responsibility and all liability (including liability for negligence) for all expenses, losses, damages and costs you might incur as a result of the information being inaccurate or incomplete in any way. Appropriate legal advice should always be obtained in actual situations.
Prefer to get in touch?
With offices in Brisbane, Sunshine Coast and Sydney, our team is well equipped to provide both advice and support across a broad range of legal areas.