Cooling Off Period Victoria

Signing a contract of sale can feel like the ultimate leap of faith. One moment you are picturing brunch on your new Carlton balcony, the next you are wondering whether you moved too fast. Fortunately, Victoria's three day cooling off period exists for precisely this moment of buyer's remorse. This article unpacks how the rule works, when it does not apply, and what smart Melburnians should do with those precious three business days.

What exactly is the cooling off period?

The cooling off period is a statutory safety net in section 31 of the Sale of Land Act 1962 (Vic). It lets most purchasers cancel a private sale contract for residential or small rural property (under 20 hectares) within three clear business days of signing, without having to justify the change of heart. Think of it as a brief pause button rather than a full rewind you can exit, but there is a modest cost.

How long is "3 clear business days"?

"Clear" means you do not count the day you sign. If you sign on a Monday, Day 1 is Tuesday and the right expires 5 pm on Thursday. Weekends and Victorian public holidays are ignored, so a Friday signing gives you until 5 pm the following Wednesday. A public holiday in the middle stretches the period again. Timing always runs to 5 pm because that is the standard "close of business" in real estate contracts.

When does the clock start?

The clock starts the moment you, the buyer, put pen to paper. It does not matter if the vendor signs later that day or even the next. This detail trips up many first timers who wrongly assume the period begins when both parties have executed the contract.

What does it cost to cool off?

If you walk away, the vendor may deduct the greater of $100 or 0.2 per cent of the purchase price from the deposit and refund the balance. On a typical $900,000 Brunswick terrace that is $1800 far cheaper than settling on a home you no longer want, but still a sum worth factoring into your calculations.

Situations where the right disappears

Auction context: No cooling off if you buy at auction, or within three clear business days before or after an auction.
Large rural or commercial property: Land over 20 hectares used mainly for farming, or property intended for industrial or commercial use.
Repeat contract: You have already signed a contract for the same property on substantially the same terms.
Corporate buyers and estate agents: Companies and licensed estate agents purchasing cannot cool off.

Serving the notice do it right or lose the right

Your notice must be in writing and received by the vendor, the vendor's conveyancer/solicitor, or the estate agent listed in the contract. Email is acceptable only if the contract expressly allows it; otherwise deliver by hand or express post and keep proof. The Supreme Court's decision in Tan v Russell [2016] VSC 93 is a sobering reminder: the buyers thought an email to the agent was enough, but the court disagreed and they lost $350,000.

Making the most of your three days

The cooling off window is more than an exit hatch it is an opportunity to stress test the purchase:

Order urgent inspections (building, pest, strata). Smaller issues can be dealt with later, but a hidden structural nightmare is reason enough to walk.
Confirm finance unconditionality. If your bank valuation comes in low, talk to your broker immediately.
Review title and Section 32 Vendor Statement. Have a conveyancer scour zoning, easements, and Owners Corporation minutes.
Re visit the neighbourhood. Visit at different times to check noise or traffic you might have missed.
Cold calculate the numbers. Factor in stamp duty, mortgage insurance, and future body corporate fees before the period lapses.

Cooling off versus conditional clauses

Do not confuse the statutory cooling off right with contractual conditions like "subject to finance" or "subject to building and pest". Those clauses may run longer than three days and are negotiated rather than automatic. Savvy buyers often use both: the statutory right as an emergency parachute and tailored conditions as a longer safety net. However, once the cooling off period ends you cannot revive it, even if your bank later refuses finance. Plan your clauses carefully with professional advice.

Does the vendor ever have a cooling off right?

No. In Victoria, only the purchaser benefits. Sellers must therefore do their due diligence before accepting an offer. This imbalance is deliberate lawmakers wanted to protect individuals who sign under time pressure or excitement.

Recent trends and proposed reforms

Despite speculation that the cooling off period might be extended to five business days, no Bill is currently before the Victorian Parliament. The last major change concerned the prohibition on land tax adjustments in 2024, which left section 31 untouched. Property lawyers expect any future reform to focus on clearer digital notice provisions rather than lengthening the period.

Practical tips for Melbourne buyers

Know your public holidays: Melbourne Cup Day, Labour Day and AFL Grand Final Friday all pause the clock. Use them to your advantage.
Act early: If you suspect you may rescind, draft the notice on Day 1. Australia Post delays are no joke.
Document everything: Keep screenshots of sent emails, delivery receipts and the contract page showing the agent's address.
Be courteous: Vendors are people too. A polite, timely notice helps negotiations later if you decide to re offer.
Seek advice fast: A brief consult with a conveyancer can cost less than the cooling off penalty and may save you from a costly error.

Frequently asked questions

Q: Can I waive my own cooling off right? A: Yes, but think twice. Waiving must be in writing in the contract and removes an important safeguard.

Q: Does paying a holding deposit start the period? A: No. Only signing the contract of sale triggers the countdown.

Q: What if the vendor has not signed yet? A: You may withdraw any time before acceptance and receive a full deposit refund. Once the vendor signs, the statutory period applies.

Key take aways

The cooling off period is three clear business days after the buyer signs.
Notice must reach the vendor, their lawyer, or the named agent before 5 pm on Day 3.
The cost to exit is $100 or 0.2 per cent of the price, whichever is higher.
Auctions, large rural blocks and company purchasers are excluded.
Use the window for inspections, finance checks and a calm second look.

Conclusion get expert guidance before time runs out

The Melbourne property market moves fast, but you do not have to. The cooling off period buys you breathing space to double check the numbers, the building, and your nerves. Still, three working days vanish in a flash. To navigate the process with confidence, contact the local team at Pearson Chambers Conveyancing. We can review your Section 32 free of charge, serve notices on time, and keep your purchase on track.

Phone: 03 9969 2405 Email: contact@pearsonchambers.com.au