Frequently sellers will require a potential buyer to waive or shorten the cooling off period because for example, an auction is pending within the 5 day period. A seller might also only be prepared to accept a buyer’s offer if it is absolutely unconditional.
How can the cooling off period be shortened or waived?
This can only be done by giving the seller or the seller’s agent a signed lawyer’s certificate in the approved form, form 32a, with part 1 fully completed and either part 2 (waiving period) or part 3 (shortening period) also completed.
When can a buyer waive the cooling off period?
The buyer may waive a cooling-off period only if the lawyer’s certificate form 32a (with part 1 completed) is given to the seller or the seller’s agent before the buyer is “bound by the relevant contract” – s 369(2).
But if a seller wants to be sure that the cooling off period has been properly waived, the seller should require that the lawyer’s certificate form 32a to be sent with the buyer’s signed contract offer.
When can a buyer shorten the cooling off period?
This can be done at any time before the contract is signed or during the cooling off period itself. The period will be shortened to 5p.m. (or another stated time) on the day stated in the certificate.
Who can sign the lawyer’s certificate?
A lawyer can only sign the certificate to waive or shorten the cooling off period if they properly explain the contract and the purpose of the certificate to the buyer. The lawyer must also:
- be independent – not act for the seller, agent or anyone else in relation to the sale;
- be independent – not be entitled to receive any benefit other than professional fees etc from the buyer; and
- have no business, family or other relationship with the seller, the seller’s agent or any other person associated with the sale or anyone providing a service in connection with the sale.
Can lawyers complete form 32a certificates by phone consultation with buyers?
Yes this is possible with appropriate documentation and procedures. This includes completion of the certificate part 2 (waiver) or the part 3 (shortening).
Carter Capner Law has appropriate measures in place to provide sound advice to buyers in relation to the shortening or waiver of cooling off periods and in many cases this can be conducted by telephone/fax.
What sort of relationships between a solicitor and agent constitute a “business relationship”?
The term “business relationship” is not defined. If the solicitor is currently acting for the agent in other matters or they jointly own any property, there is an obvious business relationship. Several examples are given in the form 32a itself. Membership of the same club or association is said not constitute a business relationship.
The provision of regular referrals by the agent to the solicitor or vice versa could well constitute a business relationship.
If there is any doubt whether an association between an agent and a solicitor constitutes a business relationship, there will also be doubt about the effectiveness of the cooling off/shortening certificate.
In a worst-case situation a buyer might be able to terminate a contract if they learn of a “business relationship” any time up until settlement. Damages might also be claimed against the agent and/or solicitor even if settlement occurs.
Forms 32a not involving waiving or shortening a cooling off period
The existence of any “business relationship” between a lawyer and agent does not prevent the lawyer signing part 1 of the Form 32a (“independence of lawyer”) – it just means that the relationships etc must be disclosed in part 1. Such a Form 32a that does not involve the waiving or shortening of the cooling-off period does not have to be given until the buyer engages a lawyer. It is then generally prepared by the lawyer, not the agent.