Conveyancing Services Parramatta – Renegotiate before it’s too late
Clients often ask us whether they can renegotiate the Contract for Sale of Land during the cooling off period. The simple answer is ‘yes’. So what next?
Understand your bargaining position
While it is possible to renegotiate the contract during the cooling off period, it may not be easy. You should understand your bargaining position before attempting to renegotiate the contract. For example, you have already signed the contract and paid a deposit, and because of that you are considered to have agreed and accepted the terms and conditions of the contract as they are. If you do nothing from this point, the contract becomes unconditional and you will be bound by it. The cooling off period gives you the right to get out of the contract, and because of that possibility – it opens the door to possible renegotiation while that right exists.
By law, the cooling off period expires at 5pm, on the 5th business day after the exchange date. During this time, you (as the buyer) can get out of the contract and avoid the legal and financial consequences of breaching an unconditional contract. The financial cost of exercising this right is 0.25% of the purchase price.
Other questions to answer
- What do you wish to renegotiate and how does it equate to a financial cost and does it exceed 0.25% of the purchase price?
- How much have you already spent on legal fees and inspection costs? Will it cost more to renegotiate, or more for starting again with another property?
- What are the other market factors? Is it a ‘buyer’s market’ or a ‘seller’s market’?
- How long have you been looking for a property? Are you prepared to go back to the market if the deal falls through?
- How long has the property been on the market? Is the seller willing to go back to the market if the deal falls through?
- Is it a unique property, or is it similar to other properties (ie, apartments, townhouses, or project homes)? Are there other alternatives that may be more open to renegotiation?
- Is it subject to a current mortgage/loan or is it fully owned? If there is a loan, there may be a financial incentive for the seller to ensure the sale proceeds as quickly as possible.
- If it is an owner occupied property, is the seller buying another property and under time pressures to move?
- If it is an investment property, is it currently tenanted or is it vacant? If the property is vacant and not earning rental income, is the seller more keen to secure a sale?
There are many different considerations when deciding whether to renegotiate a contract during the cooling off period, and many different strategies to influence the outcome of that renegotiation. Your lawyer or conveyancer may assist you with this process, even though once you have signed the contract you are considered to have accepted the terms and conditions of the contract.
What are your experiences?
If you have had your own experiences, both successful or unsuccessful, with renegotiating a contract during the cooling off period, we would like to hear from you and invite you to leave your comments below.