Cooling Off Notice under Real Estate Contract of Sale

Many of our clients may remember the update we sent to you in July 2016 concerning a supreme court case and the service of the cooling off notice.  In early 2017, there has been amendment to the s.31 of the Sale of Land Act 1962 (Vic) to clarify that a cooling off notice now may be served on the real estate agent engaged by a vendor to sell the land.  This is in addition to serving a notice on the vendor or an agent of the vendor.  This means any notices given prior to the commencement of the Act are deemed to be valid when served in accordance with the amended section 31.  

The amendments came about following the decision in Tan v Russell [2016] VSC 93. At first it was held that the purchaser did not validly exercise their right to cool off pursuant to s.31 as the cooling off notice was served on the vendor’s real estate agent only (see our email of last year).  Justice Cameron was of the view that the reference to ‘agent’ in s.31 meant an agent at law and did not include the vendor’s real estate agent.

On appeal however, it was held that the purchasers had validly exercised their right to rescind. See Lo v Russell [2016] VSCA 323.  We believe that both the legislation as amended and the appeal decision represent good law.  

As many of you may have already been aware of this, this update is just for completeness.

You should also be aware that exercising cooling off right is not free.  0.2% of the purchase price is normally payable to the vendor.  Once a Contract of Sale is signed by the purchaser (i.e. purchaser makes an offer), you may have very limited timeframe to negotiate any subsequent changes and the vendor may reject any subsequent changes requested. 

This office offers pre-contract review services for any type of Contract of Sale before you intend to make an offer.    If you have any need for pre-contract advice or require any assistance or advice regarding cooling off, please contact our office on 03 8685 8568.

Disclaimer

Any article published over our website is intended to provide commentary and general information only. It is not intended to and should not be relied upon as legal advice. Formal legal advice should be sought in each individual matter and based on personal circumstances. D Y & Co Lawyers is not responsible for consequences arising from any reliance on any article published.