A Section 66W Certificate is a certificate issued under sections 66T and 66W of the Conveyancing Act 1919 (NSW), and has the effect of waiving the 5-day cooling off period usually granted to the purchaser after settlement of the purchase of the property. This certificate must be issued by the purchaser and their representatives, and is usually issued at the request of the vendor.
What is a Section 66W Certficate
To comply with the requirements in the Conveyancing Act, the s66W Certificate must:
- Be in writing;
- Be signed by a solicitor or barrister, other than:
- A solicitor acting for the vendor or a solicitor acting in the same legal practice as the solicitor of the vendor;
- Indicate the purpose of the certificate (that is, to waive the cooling off period); and
- Contain a statement stating that the solicitor or barrister explained the effect of the certificate to the purchaser, including its nature and the effect of giving the certificate to the vendor.
What is a Cooling Off Period and do I need one?
A cooling off period will only apply to the purchase of real property by private transaction, rather than public auctions. In a public auction, the contract is binding immediately after the property is declared ‘sold!’.
In private conveyancing matters, a cooling off period is a period which lasts 5 business days from 5pm on the day that the exchange of contracts occurs. Once the contract is signed and exchanged, it becomes binding. The cooling off period which follows ensures that a purchaser has time to consider their purchase, conduct any final inspections of the property, and arrange any finance that they have not arranged yet.
Why do I need a Section 66W Certificate?
A s66W Certificate is often beneficial to a vendor who would like to finalise a purchase as quickly as possible, as it ensures that the purchaser will not back out once the exchange of contracts is complete. Where there are many prospective purchasers in competition, it may also be an advantage to the purchaser to obtain a s66W Certificate so that they can secure the property.
What are the consequences of a Section 66W Certificate?
In cases where a s66W Certificate has not been provided and the purchaser seeks to withdraw from a property purchase during a cooling-off period, they will generally still incur a financial penalty for their decision to terminate the contract. This penalty is typically limited to a maximum of 0.25% of the property's purchase price.
Where a Section 66W Certificate has been produced, and the purchaser wants to back out, they will be subject to a far greater penalty, as they will be penalised in accordance with the terms of the contract. Often, this will include that the vendor keeps the deposit paid by the purchaser (around 10% of the purchase price) and may also include the condition that a purchaser will need to pay the difference between the price that they purchased the property for and the price that the property was eventually sold for. This will only apply where the latter is less than the former.
How we ATA Legal help you with a Section 66W Certficate?
If you are looking to prepare a Section 66W Certificate, or would like to find out more about its effects, please feel free to contact us on (02) 8580 2312 or send us an email at info@atalegal.com.au.
Need Advice?
Speak with one of our helpful team members today!
