What is a cooling-off period?
A cooling-off period allows Queensland homeowners a short timeframe to reconsider and potentially withdraw from a residential building contract after signing.
Under section 35 of Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act), homeowners can withdraw from a regulated residential building contract (building contract) within five (5) business days after the day they receive a copy of the signed building contract from the builder.
Additionally, for level 2 regulated building contracts, if the homeowner does not receive the QBCC Consumer Building Guide (Guide) before receiving the signed building contract, the homeowner can withdraw within five (5) business days after receiving the Guide.
What if the builder doesn’t provide the signed building contract or QBCC Consumer Building Guide?
Pursuant to section 35(3) of Schedule 1B of the QBCC Act, if five (5) business days have passed since the building contract was signed and the homeowner still hasn’t received a copy of the signed building contract (and the QBCC Consumer Building Guide for level 2 regulated building contracts), the homeowner has the right to withdraw from the building contract at any time.
When can homeowners NOT withdraw from the building contract during the cooling off period?
Pursuant to section 36 of Schedule 1B of the QBCC Act, homeowners cannot withdraw from the building contract during the cooling off period if:
- they previously had a regulated building contract with the same builder and:
- the terms of the previous contract and the current contract are substantially the same; and
- the contracted services for the previous contract and the current are substantially the same and relate to the same dwelling, home or land; or
- they received formal legal advice about the building contract before signing or informed the builder after signing that they had received such advice.
How do homeowners withdraw from the building contract during the cooling off period?
Section 37 of Schedule 1B of the QBCC Act, says that homeowners must provide a written, signed withdrawal notice stating clearly that they are withdrawing under section 35, Schedule 1B of the QBCC Act. The notice must be:
- given directly to the builder;
- left at the builder’s address stated in the building contract; or
- served on the builder according to any provision in the building contract providing for service of notices by the owner on the builder.
This must be completed within the applicable five (5) business day period.
What happens after homeowners withdraw under the building contract?
After withdrawal from the building contract, pursuant to section 38 of Schedule 1B of the QBCC Act:
- the building contract immediately ends;
- if homeowners have prepaid an amount to the builder under the building contract that is equal to or greater than (not less than) the builder’s reasonably incurred out-of-pocket expenses incurred plus $100, the builder may keep this amount and must refund any excess;
- if homeowners have prepaid an amount less than the builder’s reasonable incurred out of pocket expenses plus $100, they must pay the difference to the builder;
- if no prepayment has been made, homeowners must pay the builder the builder’s reasonable expenses plus $100; and
- if either party does not pay the other party an amount due under they may recover the amount owed as debt.
Can homeowners waive their right to withdraw under the cooling off period?
Homeowners may waive their right to withdraw from the building contract under section 39 of Schedule 1B of the QBCC Act, but this applies specifically to repair contracts. A waiver must be:
- in writing;
- signed by the homeowner; and
- delivered to the builder’s address or served according to the service procedures outlined in the building contract.
“Repair” includes an alteration, improvement or replacement that it is necessary or reasonable to carry out instead of effecting a repair.
A recent example
A recent Queensland Civil and Administrative Tribunal (QCAT) decision, Number One Quality Homes Pty Ltd v Murphy [2024] QCAT 605, highlights the importance of complying with cooling-off requirements. In this case, homeowners successfully withdrew from a regulated building contract under section 35(3) of Schedule 1B of the QBCC Act due to the builder’s failure to provide the signed building contract and the Guide. QCAT ordered the builder to refund over $28,000 to the homeowners, reinforcing the significance of understanding and adhering to these statutory obligations.
Need help understanding your rights and obligations?
Time is of the essence when it comes to compliance with the cooling-off requirements. If you are unsure about your cooling-off rights, how these rules apply to your situation, or need help preparing formal notices to your builder, always obtain legal advice promptly. Our experienced team is ready to guide you clearly through every step. Contact us today for friendly, professional assistance.
DISCLAIMER:
This article provides general information and should not be taken to be legal advice. Each agreement is different and therefore you should obtain specific legal advice. If you have any questions, please do not hesitate to contact your lawyer or our team at Construct Law Group on (07) 3139 1874 or at info@constructlaw.com.au.
