Unconditional exchange, Section 66w Certificate and Cool Off Exchange
A draft section 66w certificate is automatically included in any auction contract. Essentially a section 66w certificate means the buyer is waiving his/her right to a cool off period. This means that on auction day, once the auctioneer knocks the gavel down, contracts are exchanged, 10% deposit is paid and the buyer can not pull out of the transaction without losing their deposit. This is one of the advantages to the vendor of selling by auction.
A Section 66w Certificate does not need to be completed if the property sells on auction day. It makes up part of the contract on auction day but it is assumed that the buyer has shown the contract to a solicitor. However, if the property sells prior to auction day the purchaser must get his/her solicitor to complete this 1 page document, it is also dated and signed by their solicitor. A 66w Certificate requires that a solicitor explains to the client the consequences of not having a cool off.
Thus a 66w certificate makes the contract unconditional and is often referred to as an unconditional exchange.
A cool off exchange on the other hand, means that the buyer (not
the vendor) has 5 business days to change his/her mind and rescind the contract for whatever reason i.e. change of heart, unsatisfactory pest and building inspection, finance not approved etc. The vendor can not pull out of a cool off exchange. On exchanging contracts with a cool off, 0.25% of the purchase price is payable and settlement terms commence. By 5pm on the 5 th business day, the remainder of the 10% deposit must be paid. If the buyer decides before the end of the 5 th business day to rescind the contract, the buyer will lose only the 0.25% deposit, which on a $1m sale is a loss of $2500.
In summary, an exchange with a 66w Certificate is an unconditional exchange, an exchange at auction is automatically an unconditional exchange and a cool off exchange requires only a .25% deposit at exchange and gives the buyer 5 business days to rescind the contract.
This is the last article in our 10 part auction series. For previous topics please visit here. If you have any particular real estate questions feel free to email firstname.lastname@example.org. We would love to write a blog series. Happy bidding everyone!Source: www.beachandbay.com.au