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Cooling Off Notices Cannot Be Accepted By Real Estate Agents

A purchaser has a right to terminate a contract of sale within 3 business days after signing a contract of sale. This right is commonly referred to as the 'cooling off right'. The cooling off right is not without qualifications. Pursuant to section 31 of the Sale of Land Act 1962 (Vic) (Act), the qualifications on the cooling off right are as follows. 

1. The right to cool off must be exercised within 3 clear business days after the purchaser signs the contract of sale.

2. The cooling off right does not apply to: 
  • property used for commercial or industrial purposes;
  • property that is purchased at or within 3 clear business days before or after an auction; 
  • property that is more than 20 hectares in size and land used primarily for farming; 
  • if the purchaser has previously entered into a contract to purchase the property, substantially on the same terms and conditions; and 
  • the purchaser is a real estate agent or a real estate company. 
Pursuant to section 31(3) of the Act, the termination notice must be given to the vendor or the vendor's "agent" or left at an address specified in the contract. 

The 2016 Supreme Court of Victoria case of Eng Kiat Tan and Cheng Lo v Thomas Russell [2016] VSC 93 had to determine whether or not a vendor's estate agent was an "agent" for the purposes of the cooling off notice. 

In the case, the purchaser gave the termination notice to the real estate agent before the expiration of the 3 business day cooling off period. The vendor refused to accept that the contract was terminated pursuant to the Act. The vendor then proceeded to resell the property, but obtained $410,000.00 below the original sale price on the re-sale. The purchaser commenced proceedings seeking recover of the deposit and the vendor counterclaimed seeking the balance of the deposit and the loss suffered on the resale of the property. 

The purchaser argued that the reference to "agent" in section 31 of the Act must extend to the vendor's estate agent. Alternatively, the vendor argued that section 31 of the Act did not create a statutory authority for the vendor's estate agent to receive a termination notice; rather it was up to the purchaser to establish that the vendor's real estate agent had actual or ostensible authority to accept the termination notice. Further, the vendor argued that there were no facts which established any authority in the vendor's real estate agent beyond that usually granted to the real estate agent. 

The trial judge held that section 31 did not grant a statutory authority in a vendor's real estate agent to accept a termination notice. Without an actual authority to accept the cooling off notice, a real estate agent is not authorised to do anything which would affect the vendor's legal position. 

Purchasers should take extra care when exercising their cooling off right to ensure that the cooling off notice to terminate the contract is issued on the vendor.  

Published 18 May 2016

For further advice or assistance

Contact Jamie McCallum on 5337 0253 or jmccallum@nevetts.com.au

The information in this publication or on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances.
The information on this website is of a general nature only. It is not, nor is it intended to be, legal advice. You should consult a lawyer for individual advice about your particular circumstances. Nevett Ford do not warrant that information contained in links to third party sites are correct and accept no responsibility for the accuracy and reliability or any other matter in relation to a third party site.