The Real Estate Institute of New South Wales (REINSW) is proposing changes to the Conveyancing Act 1919 to make it more convenient for buyers to waive the cooling-off period.
In a submission to the NSW Fair Trading, REINSW asked for the amendment of section 66W(1)(d), which requires buyers to seek for a solicitor or a licensed conveyancer to explain the effect of the contract of sale before waiving their right to rescind the Contract for Sale and Purchase of Land.
Requiring buyers to get legal advice raises practical concerns, said REINSW.
"What if the buyer makes an offer after COB on Friday and the property is up for auction on Saturday morning? It's unlikely the buyer will be able to find a solicitor or licensed conveyancer who is in a position to explain the effect of the contract to them before the auction," REINSW said.
Also read: Big “hidden” costs of buying a property
In such situations, the seller is left in a dilemma of either accepting an offer that may later be cancelled and wasting the auction costs incurred or refusing the offer and risk selling for less at auction.
While the current rules aim to protect buyers from gazumping, wherein the seller raises the contracted price of a property after having informally accepted a lower offer, REINSW said the opposite happens due to the measures in place.
"This is because a buyer who is willing to waive their cooling-off rights simply can't provide the certificate quickly enough. They may not be able to access a solicitor or licensed conveyancer to explain the effect of the contract and, in the meantime, another buyer has the opportunity to swoop in," REINSW said.
Read more: What are your rights as a buyer when settlement is delayed?
The burden is heavier with unrepresented buyers, as they do not have immediate access to a solicitor or a licensed conveyancer.
REINSW said solicitors should only be required to explain the nature of the waiver certificate and its effect on sellers.
"REINSW believes that by removing the requirement, these practical problems can be avoided. Buyers will be free to waive the cooling-off period after receiving general advice that is limited to the nature and effect of the certificate," REINSW said.
Furthermore, the cooling-off provisions are actually already in place under the 2019 Contract for Sale and Purchase of Land and the existing provision under the Conveyancing Act requiring sellers to include certain prescribed terms in the contract for sale.
"This amendment will improve the efficiency of real estate transactions and protect buyers from gazumping. It will also maintain the essential requirement that buyers are made aware of the effect of waiving their right to a cooling-off period," REINSW said.
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