A Section 66W Certificate (or s66W Certificate) waives the standard cooling off period in relation to a purchase of property and makes the contract immediately binding on the parties rather than the usual five days after exchange. The certificate is commonly referred to when buying or selling real estate property in Australia. Under Part 4, Division 8 of the Conveyancing Act 1919 (NSW), the s66W certificate may apply during the exchange process, whereby two parties (a vendor and a purchaser) are entering into a contract to buy a property.
Why Do I Need a Section 66W Certificate?
In New South Wales, a standard cooling off period is the date of contract exchange to 5pm on the fifth business day after the contract exchange. This grace period is granted to ensure buyers have time to consider their purchase and the option to change their mind.
Purchasers may often want to exchange contracts more quickly and exclude other interested buyers in a property transaction. This can be an attractive tool to convince the vendor you are interested in the property and are willing to purchase ahead of other potential buyers. Purchasers may decide to proceed with the exchange immediately, foregoing the cooling period, and not be fully informed as to the full condition of the property. It is important to note that when purchasing property at an auction, a cooling off period does not apply and the contract will be bound immediately after the hammer falls, pending all other conditions (i.e. reserve price) have been met. A cooling off period only applies to private settlements.
A s66W certificate is generally requested by real estate agents. The certificate can be provided by the purchaser to the vendor which waives the cooling off period and makes the contract binding immediately. Once a certificate is provided by the purchaser at the exchange, the purchaser rescind (back out) of the purchaser if they discover something wrong with the property.
Example of a s66W Certificate
A s66W certificate may set out the following:
- The name of the legal practitioner (solicitor or barrister) and where they are admitted to practice (or the name or a licensed conveyancer);
- A statement that the legal practitioner is giving the certificate in accordance with section 66W of the Conveyancing Act 1919 (NSW);
- Reference to the name of the property, the vendors and the purchasers;
- State that there is no cooling off period in relation to the contract;
- A statement that the legal practitioner does not act for the vendors; and
- A statement that the legal practitioner has explained to the purchasers that the effect of the contract for the purchase of the property, the nature of the section 66W certificate and that the effect of no cooling off period.
Can I Still Back Out of the Property Sale?
As a purchaser, if you decide to back out of the contract after a contract exchange and a section 66W certificate has been provided, the cooling off period does not take effect. You will be penalised as per the original contract, which can be 10% of the purchaser price. If you decide to rescind the contract during the cooling off period (where there is no s66W certificate), you will often be required to pay 0.25% of the purchase price.
As an example, rescinding out of a $1 million sale where a 66W has been provided will be a cost of $100,000 to the purchaser, compared to $2,500 without a certificate. This illustrates the considerable difference in penalty where a certificate has and has not been provided. Purchasers should be confident that they will not rescind on the exchange before they proceed with a s66W certificate. Conducting the relevant research and having finance approval should all be undertaken before providing a 66W certificate to the vendor.
Key Takeaways
Purchasing a property can be a complex and stressful event. It is often one of the biggest purchasing decisions in your life. If you are buying real estate in New South Wales, note that a five day cooling off period applies after contract exchange. In circumstances where you wish to waive your right to a cooling off period, a section 66W certificate will waive the period for you. However, you should be confident that you will not rescind on the contract.
If you have any questions about a Section 66W certificate, get in touch with LegalVision’s property lawyers. Questions? Call us on 1300 544 755 or complete the form on this page. We can also assist property enquiries for purchasers and vendors in all other states and territories including Queensland and Victoria.