A 66W waives the right to a cooling off period

You might hear an agent say when you’re making an offer to buy a house that “The vendor will only exchange with a 66W certificate”.

The request is a reference to Section 66W of the Conveyancing Act 1919. The agent is telling you that the vendor doesn’t want to exchange contracts with a purchaser who retains the right to rescind (that is, cancel or get out of the contract).

Section 66S of that same Act says that a Cooling Off period applies to the contract for sale of residential property when sold by private treaty. That is, the purchaser can rescind the contract (subject to strict notice provisions) before the expiry of the cooling off period, which is 5pm on the fifth business day after exchange. (The purchaser will lose 0.25% of the purchase price if they exercise that right, however)

When a 66W is provided, the purchaser waives that right to a cooling off period. The purchaser becomes immediately unconditionally bound to the contract on exchange.

A 66W certificate must be signed by the solicitor for the purchaser.

Whether a contract contract  exchanges with a 66W certificate is largely market driven. When acting for vendors, solicitors often advise that the contract should only be exchanged with a 66W. However sometimes properties in rural areas or properties in the first home buyers market will often exchange without one.

(Take note there is no cooling off period to contracts exhanged under auction conditions.)

Be careful – not every property purchase has the benefit of a cool-off

A cooling off period only applies to the purchaser of certain “residential property” . Section 66Q defines “residential property” as (generally):

1. Land on which there is not more than two places of residence; or
2. Vacant land on which construction of a place of residence alone is not prohibited; or
3. A lot or lots under the Strata Schemes Development Act 2015, comprising not more than one place of residence alone.

Residential property does not include:

1. Land that is used wholly for non-residential purposes; or
2. Land that is more than 2.5 hectares in area.

What are my risks?

Naturally if you are uncertain about obtaining finance then you should not exchange with a 66W.

Be careful that the property is “residential property” as defined because you don’t want to act under the missapprension that a cooling off period applies when it doesn’t.

Always seek advice before attending an auction or signing a contract.