No cooling off period right

NSW legal practitioners will be familiar with the effect of a 66W Certificate, which if signed by a legal practitioner at or before a contract for sale of NSW residential property is exchanged, means that a purchaser waives the cooling off period otherwise afforded that purchaser pursuant to s66S of the Conveyancing Act 1919 NSW ("the Act"). Waiver of that right in this way is afforded pursuant to s66T(a) of the Act.

Those same readers may be less familiar with s66T(d) of the Act, which provides that a purchaser of NSW residential property does not have the benefit of a s66S cooling off period right where a contract for sale is made pursuant to the exercise of an option.

Meaning of "option" - Conventional wisdom

Until 2021, though not judicially tested until then, conventional wisdom was that when S66T(d) spoke of an option, that included both a call option and a put option. So, no cooling off period right to rescind a contact for sale of residential property was thought to be available to a purchaser if called into being by that purchaser, or formed by a vendor putting the property to the purchaser.

So much for conventional wisdom

The NSW Supreme Court in the case of BP7 Pty Ltd V Gavancorp Pty Ltd (2021) NSWSC 265 ("the Case") upset what conventional wisdom would have was the meaning of "option".

The facts in the Case were that a contract for sale of NSW residential property was formed when BP7 Pty Ltd ('the Vendor") put the property to Gavancorp Pty Ltd ("the Purchaser") pursuant to a put option right, the Purchaser not having earlier exercised its call option right.

The Purchaser rescinded the contract for sale, exercising what it said was its cooling off period right under s66S of the Act, thus testing conventional wisdom.

The Purchaser asked the Supreme Court to determine that conventional wisdom was wrong, that "option" only meant a call option, and that s66T(d) only denied a purchaser its s66S cooling off period right when a purchaser created a contract for sale by calling it into existence, and not where a vendor created it by putting the property to that purchaser. The Supreme Court agreed, saying that "option" should be given its normal and usual meaning, being where a purchaser had a choice of whether or not to form a contract for sale. In circumstances where exchange of contracts to purchase a property is effected by a vendor putting the property to a purchaser pursuant to a put option right, the purchaser has no such choice. Accordingly, in those circumstances, s66T(d) did mean that the Purchaser still had a cooling off period right, because by putting the property to the Purchaser, the Vendor gave the Purchaser no choice but to buy it - i.e., the Purchaser had no say (read "option") in the matter - so, by rescinding the contract for sale during that s66S cooling off period, the Purchaser did so lawfully.

Conventional wisdom restored

Schedule 1 [5] of the Conveyancing and Real Property Amendment Bill 2025 (NSW) ("the Bill"), assented to on 15 August 2025, amended the definition of "option" in s66P(1) of the Act to mean both an option to purchase property (i.e. a call option) and an option to compel the purchase of property (i.e. a put option).

Practical Result

Clearly now, by reason of the Bill, purchasers in NSW have no s66S cooling off period rights where a contract for sale of residential property is formed pursuant to a call option or a put option.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.