The short answer: if you buy a home in Victoria by private sale, you generally have a cooling-off period of 3 clear business days after you sign, during which you can end the contract by written notice, but the vendor may keep $100 or 0.2% of the purchase price, whichever is more. If you buy at a public auction, or sign within 3 clear business days before or after a publicly advertised auction, there is generally no cooling-off period.
At a glance
- The cooling-off period is set by the Sale of Land Act 1962 (Vic) and runs for 3 clear business days from the day the buyer signs.
- You must give written notice to the vendor or the vendor's agent; the vendor may keep $100 or 0.2% of the price (whichever is more) and the rest of the deposit is refunded.
- Cooling-off does not apply to auction purchases, contracts signed within 3 clear business days before or after an auction, commercial or industrial property, farmland over 20 hectares, or buyers that are companies or estate agents.
- A contract clause cannot remove a statutory cooling-off right, but nor does anything give you a right to back out of an auction purchase.
- The most reliable protection is to finish your checks, finance approval and legal review before signing, or to negotiate special conditions in a private sale.
How is cooling-off calculated and exercised?
‘Clear business days’ do not include the day of signing, nor Saturdays, Sundays or public holidays. For example, if you sign on a Monday, the cooling-off period generally ends on Thursday (check the contract and the law for the exact time). To withdraw you must notify the vendor or the vendor's agent in writing; telling the agent verbally that you no longer want to buy is not enough. Use email together with a letter and keep proof of sending.
After withdrawing, the vendor may keep $100 or 0.2% of the purchase price, whichever is more. On an $800,000 home, 0.2% is $1,600, and the rest of the deposit should be refunded. You do not need to give a reason during the cooling-off period.
When is there no cooling-off period?
- You buy at a public auction.
- You sign within 3 clear business days before or after a publicly advertised auction (for example, a deal after the property is passed in).
- The property is used primarily for industrial or commercial purposes.
- The land is more than 20 hectares and used primarily for farming.
- The buyer is an estate agent or a corporate body.
- The buyer and vendor previously signed a contract for the same land on substantially the same terms.
The ‘company buyer’ exception is often overlooked: if you buy through your own company (or a company acting as trustee), there is generally no cooling-off right.
Special risks of buying at auction
Once the hammer falls at auction, the buyer usually has to sign the contract on the spot and pay a deposit (commonly 10%, though this can be negotiated). Auction contracts are generally unconditional, with no 'subject to finance' or 'subject to building inspection' clause. If finance is not approved later, the buyer must still complete settlement on time, or they may be in breach, lose the deposit and be liable for the vendor's losses. From 2026, Victoria has also introduced new auction rules, such as requiring agents to publish the vendor's reserve price at least 7 days before an auction or set-date sale. This helps buyers, but it does not change the basic principle that there is no cooling-off period at auction.
After cooling-off, are there other ways out?
Once the cooling-off period has ended, buyers are not completely without options, but each path comes with strict conditions. First, if the contract has a special condition such as 'subject to finance', and the buyer applies for finance in good faith, in the way and within the time the contract requires, and is still refused, they can usually end the contract under that clause and get the deposit back. Second, if the vendor did not provide Section 32, or it contains material errors or omissions, the buyer may be entitled to end the contract before settlement. Third, the buyer and vendor can agree to end the contract on terms they negotiate between them.
If a buyer simply changes their mind and refuses to settle, this may be a default. The vendor can generally serve a default notice and, once it expires, end the contract, keep the deposit (up to 10% of the price) and claim any shortfall on resale and associated costs from the buyer. So if you run into difficulty, do not stay silent or delay – get legal advice early.
How to protect yourself before signing
Cooling-off is only a small exit, and it comes at a cost. It is better to do your homework before signing:
- Ask a lawyer or conveyancer to review the contract and Section 32 before the auction or before you sign.
- Get finance pre-approval before the auction and confirm the bank's valuation of the property.
- Complete building and pest inspections in advance.
- In a private sale, negotiate special conditions such as finance or building inspection approval, and watch the deadlines.
- Overseas buyers should first check the Foreign Investment Review Board (FIRB) requirements, so they are not left unable to complete after signing.
- Confirm the buyer entity (individual, couple, company or trust), as this affects cooling-off rights and taxes.
FAQs
Does cooling-off start from signing or from receiving the contract?
It runs for 3 clear business days from the day the buyer signs, not counting the day of signing. Check the contract and the law for the exact deadline.
If the property is passed in and I buy it privately the next day, do I get cooling-off?
Generally no. Contracts signed within 3 clear business days before or after a publicly advertised auction do not have a cooling-off period.
Can a contract say I give up the cooling-off right?
The law does not allow a contract clause to exclude the statutory cooling-off right. However, in the statutory exceptions (such as auctions) there is no cooling-off right to begin with.
If I withdraw during cooling-off, do I get the whole deposit back?
Not all of it. The vendor may keep $100 or 0.2% of the purchase price, whichever is more, and the rest should be refunded.
What if my loan is not approved after buying at auction?
Auction contracts generally have no finance condition, so you must still settle. Seek legal advice immediately and discuss options such as an extension with the vendor to limit losses from default.
Chua Tan Associates has practised in Melbourne since 1990, acting on property purchases and sales, conveyancing, building contracts and property disputes in Mandarin, Cantonese and English. Tan Chua has long handled property and commercial matters for Melbourne's Chinese community. For help, call 03 9602 3988 or contact us online. We can meet at our Melbourne CBD office or by video.
This page provides general information only and is not legal advice.
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