Cooling off period 

For agreements for the sale of residential property or rural land

The Property, Stock and Business Agents Act 2002 and the Property, Stock and Business Agents Regulation 2003 contain a number of measures to address difficulties that home owners sometimes encounter in understanding their rights and obligations under agency agreements. 

Under the law:

• certain terms, warnings and disclosures must be included in agency agreements,
• the agent must give a copy of the consumer guide Agency agreements for the sale of residential property to sellers of residential property before they sign the agency agreement, and
• the seller has a cooling-off period of one business day (including Saturday) in which they can cancel (‘rescind’) the agency agreement after having signed it.

How the cooling-off period works
How does the client rescind the agency agreement?
What is the effect of rescission?
How does the client waive the cooling-off period?
Is the agent still required to serve the client with a copy of the fully signed agreement within 48 hours?

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How the cooling-off period works

Under section 59 of the Act, the agency agreement must be signed by or on behalf of the client.  If there is more than one client, a signature is required for each client. 

The cooling-off period commences when the agreement has been signed by or for each of the client/s and ends at 5pm on the next business day or Saturday.  Public holidays, bank holidays and Sundays are not included in the cooling-off period. 

For example, if the client signs the agreement on a Friday, the cooling-off period ends at 5pm on the following Saturday.  If they sign on a Saturday, the cooling-off period ends at 5pm on Monday, unless that is a public or bank holiday, in which case it will usually end at 5pm on Tuesday. 

The length of the cooling-off period can be extended if the agent and client agree.  This can be done in two ways: 

• a term can be included in the agency agreement stating the agreed longer cooling-off period, or
• before the usual cooling-off period ends, the agent can sign a written statement extending the cooling-off period. 

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How does the client rescind the agency agreement?

If the client decides not to proceed with the agreement, they need to serve the agent with a written ‘notice of rescission’ within the cooling-off period. 

The notice of rescission is simply a letter addressed to the agent stating that the client rescinds or cancels the agreement (or other words to that effect). 

The notice must be signed by the client or their solicitor.  If there is more than one client, the notice must be signed by each client or their respective solicitors. 

The notice can be served on the agent by:

• giving it to the agent personally, or
• delivering it to or leaving it at the agent's place of business or at any other address specified in the agency agreement as a place where a notice of rescission may be given, or
• faxing it to the agent. 

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What is the effect of rescission?

When a notice of rescission is served during the cooling-off period, the agency agreement is taken to have been rescinded from the time it was entered into (ie. when it was signed by or for the client/s). 

Neither the agent or the client is liable to pay any commission, damages, costs or expenses in connection with the agency agreement or its rescission. 

If the client has already paid any money to the agent, it must be refunded in full.

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How does the client waive the cooling-off period?

The client can choose to give up, or ‘waive’, their right to a cooling-off period. 

The cooling-off period can only be waived under the following conditions:

• at least one business day before the agency agreement is signed, the agent must the client a copy of the unsigned agreement, and
• if the agreement is for the sale of residential property, at least one business day before the agency agreement is signed, the agent must give the client a copy of the consumer guide Agency agreements for the sale of residential property at least one business day before the agency agreement is signed, and
• the client must sign the Office of Fair Trading approved waiver form before signing the agency agreement. 

In relation to giving the client a copy of the unsigned agreement and consumer guide, a Saturday is not recognised as a business day.

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Is the agent still required to serve the client with a copy of the fully signed agreement within 48 hours?

Yes. 

Section 55 of the Act requires that a copy of the agency agreement signed by the licensee must be served on the client within 48 hours of the client having signed it, or the agent’s right to receive payment for commission and expenses may be lost. 

To summarise:

• as soon as all the clients have signed the agreement, the cooling-off period commences (unless it has been waived), and
• a copy of the agreement needs to be given to the client, whether or not the licensee has signed it, to enable the client to read the agreement during the cooling-off period (unless it has been waived), and
• whether or not the cooling-off period has been waived, the licensee must sign the agreement and serve a copy on the client within 48 hours, in one of the ways permitted by the Act.