Buying a house and leaving a deposit is a big commitment. It’s you confirming that you’ll be completing the purchase of a property, but sometimes circumstances change and you may want to withdraw your offer. If this is the case you will likely want your deposit back as well. Your ability to receive your deposit back varies from state to state.
In most cases, when you are purchasing a property and have made an offer, signed the contract and made the deposit, there is an important stage called the cooling-off period that follows. This period commences from the day you receive a copy of the signed contract between the seller and yourself, but does not include Sundays or public holidays.
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During this time you are permitted to cancel the sale, though it’s important to be mindful of the fact that the duration and rules of cooling-off periods vary depending on the state and territory in which the sale occurs. This means that you may not always get your deposit back, even if you adhere to the rules of the cooling off period.
In New South Wales, Queensland and the ACT there is a 5 business day cooling-off period in which you can pull out of your offer. If you do so within this period you will then be forced to forfeit 0.25% of the purchase price. The seller then has 14 days in which to transfer you back your full deposit.
In Victoria the cooling-off period is 3 days. If you cancel your offer within these days you will then have to pay 0.2% of the total purchase price, but then you will be returned the deposit in full within 14 days.
In South Australia the cooling-off period is 2 business days from when both the seller and the buyer signed the contract. You are eligible to cancel within this time, but will have to forfeit a small holding deposit of up to $100, after which you will be refunded your deposit in full.
In the Northern Territory there is a 4 day cooling-off period during which you are able to rescind your offer with no forfeit and then be returned your deposit in full.
In Western Australia there is no statewide cooling-off period, though you can organise one within your contract of purchase with the seller. If the seller accepts your offer and you have made a deposit, and you go through with the sale the deposited amount will be added to paying off the purchase price. However, if you withdraw, the seller may be eligible to keep the deposit and you may have to pay other penalties, unless your withdrawal is for a valid reason (eg. home loan gets denied) in which case the seller must return the deposit in full.
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Lastly, in Tasmania, like in Western Australia, there is no cooling-off period. Upon making your offer and signing the contract you will be required to make a deposit of at least 10%. If you, as the buyer, then change your mind, the seller will keep the deposit in full and you may be liable to pay them extra fees called liquidated damages, to cover any loss they may experience on the resale. So if you want to buy a property, be sure in your decision to purchase it, and inspect the property’s condition before making an offer as vendors in Tasmania aren’t legally required to tell you about any existing problems. These precautions could save you a lot of money and trouble.
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Withdrawing from an offer on a property can cause you to lose the deposit in full if you are not aware of your state or territories rules regarding cooling-off periods. Moreover, once the cooling-off period has ended, it is more than likely that you will lose your entire deposit and be expected to pay compensation and default penalties to the seller, according to your contract.
To save yourself from experiencing any losses, make sure that you can afford and do want the property before making an offer and finalising a deposit.
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