In response to industry feedback, REINSW has made a submission to NSW Fair Trading seeking an amendment to the Conveyancing Act 1919 (NSW) to make it easier for buyers to waive the cooling-off period.
Section 66S of the Conveyancing Act provides residential property buyers with a “cooling-off period”. During this period, they have a right to rescind the Contract for Sale and Purchase of Land. Buyers can waive this right by satisfying the criteria in section 66W, including the requirement in section 66W(1)(d) for their solicitor or licensed conveyancer to explain the effect of the contract of sale to them, as well as the nature of the waiver certificate and effect of that certificate on the seller.
Yes, these cooling-off period provisions, in general, provide a degree of protection for buyers. But REINSW believes that section 66W(1)(d) should be amended to remove the requirement for a solicitor or licensed conveyancer to explain the effect of the contract to the buyer. Instead, they should only be required to explain the nature of the waiver certificate and the effect of the certificate on the seller.
So why is REINSW asking for this amendment?
When first introduced, the aim of the cooling-off provisions was to protect buyers from gazumping and improve the efficiency of transactions. But rather than achieving these aims, the impact has been quite the opposite.
Requiring a buyer to consult a solicitor or licensed conveyancer to explain the effect of the contract presents practical problems.
What if the buyer makes an offer after COB on Friday and the property is up for auction on Saturday morning? It’s unlikely the buyer will be able to find a solicitor or licensed conveyancer who is in a position to explain the effect of the contract to them before the auction. The seller is then left in the unenviable position of choosing either to accept an offer that may later be rescinded (and wasting the auction costs incurred), or refuse the offer and risk selling for less at auction.
Further, far from protecting a buyer from gazumping, the current provisions instead create the opportunity for it to occur. Why? Because a buyer who is willing to waive their cooling-off rights simply can’t provide the certificate quickly enough. They may not be able to access a solicitor or licensed conveyancer to explain the effect of the contract and, in the meantime, another buyer has the opportunity to swoop in.
And what about unrepresented buyers? The current provisions impose an unfair burden on buyers who don’t have access to a solicitor or licensed conveyancer who can explain the effect of the contract to them.
REINSW believes that by removing the requirement in section 66W(1)(d), these practical problems can be avoided. Buyers will be free to waive the cooling-off period after receiving general advice that is limited to the nature and effect of the certificate.
Unnecessary layer of consumer protection
Consumer protection is a must, but the cooling-off provisions do little to add to the mechanisms that are already in place.
The 2019 Contract for Sale and Purchase of Land includes a range of statutory warnings that inform buyers about things like finance, deposits, insurance and tax obligations. It also includes a notice advising buyers of their rights relating to the cooling-off period. In addition, by virtue of section 52A of the Conveyancing Act, the seller is deemed to have included certain prescribed terms in the contract for sale. Section 52A also requires that certain prescribed documents are attached to the contract for sale prior to the buyer signing.
With all this in place, why then is it necessary to require a solicitor or licensed conveyancer to explain the effect of the contract? Is it adding any further meaningful protection?
Out of step
Without doubt, New South Wales is out of step with other jurisdictions when it comes to cooling-off periods.
Take Queensland, where there’s no requirement for the purchaser to receive legal advice about the contract. Then there’s the Australian Capital Territory, where a buyer is allowed to waive their cooling off rights if they’ve received legal advice describing the nature and effect of the waiver certificate.
If it’s working in these jurisdictions, why not New South Wales?
Different rules at auction
And then there are auctions.
There will certainly be those buyers at an auction who haven’t accessed legal advice about the terms of the contract for sale. Why should a buyer purchasing via private treaty be required to access a solicitor or licensed conveyancer to explain the effect of the contract when a buyer at auction is not?
Similarly to an auctioneer explaining the effect of bidding at the start of an auction, the provider of a section 66W certificate should be able to limit their advice to the effect of having no cooling-off rights.
For all these reasons, REINSW has recommended to NSW Fair Trading that section 66W(1)(d) be amended to omit the requirement that a buyer receive legal advice regarding the effect of the contract for sale. This amendment will improve the efficiency of real estate transactions and protect buyers from gazumping. It will also maintain the essential requirement that buyers are made aware of the effect of waiving their right to a cooling-off period.
Read REINSW’s submission
- Want to keep up-to-date with industry news? Become a member today
- If you're a member and have any questions call the REINSW Helpline on 9264 2343.
- Beat 23 March 2020. Get qualified. Save time and money having your experience recognised with Recognition of Prior Learning. Discounts offered for groups of five or more. Learn more.