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.
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