Once the cooling off period has expired, you are legally committed to the purchase. Pulling out after this point can cost you significantly — and in some cases, the vendor can sue you for additional losses beyond your deposit. Understanding your rights and obligations before this point is critical.

What Is the Cooling Off Period in Victoria?

In Victoria, buyers have a 3 business day cooling off period after signing a contract of sale. During this period, you can withdraw from the purchase by paying a penalty of 0.2% of the purchase price (for example, $1,400 on a $700,000 property). Properties sold at auction have no cooling off period.

What Happens If I Pull Out After Cooling Off?

If you withdraw from a property purchase after the cooling off period has expired, the vendor can:

• Forfeit your deposit (typically 10% of the purchase price)
• Resell the property and sue you for any shortfall if it sells for less
• Claim additional damages for costs incurred as a result of the failed settlement

On a $700,000 purchase, forfeiting your deposit alone means losing $70,000.

Are There Any Circumstances Where I Can Pull Out?

There are limited circumstances where you may be able to exit a contract after cooling off without penalty:

• Finance condition: If your contract has a finance clause and your loan is declined within the specified period
• Building and pest condition: If a building inspection reveals a major defect within the specified period
• Vendor default: If the vendor breaches the contract, you may be entitled to terminate
• Mutual agreement: If both parties agree to rescind the contract

How to Avoid This Situation

The best way to avoid being trapped in a purchase you want to exit is to get independent advice before you sign. A Collings Property Advisor assesses the property, identifies red flags, reviews the contract, and ensures you are confident in the purchase before you commit — for a fixed fee of $4,500 + GST.

Common Mistakes Buyers Make

• Signing at auction without any finance pre-approval — auction purchases have no cooling off period
• Not including a building and pest condition in the contract
• Not getting independent advice on value before signing
• Letting emotional pressure from agents rush the signing decision

Frequently Asked Questions

Can I get my deposit back if I pull out after cooling off?

Generally no. The vendor is entitled to keep your deposit if you default after the cooling off period has expired. You may also be liable for additional losses.

What if I cannot get finance after the cooling off period?

If your contract includes a finance condition and your loan is formally declined within the finance period, you can withdraw without penalty. If there is no finance clause, you are committed regardless of your finance situation.

Want to make sure you are confident and protected before signing? Book a Collings Property Advisory consultation for $4,500 + GST. Visit collings.com.au/portal to get started.