Cooling-Off on Residential Building Contracts in SA

What it is

South Australia has a cooling-off right, but the Act never calls it that. Part 5 Division 4 of the Building Work Contractors Act 1995 (SA) is headed "Right to terminate certain domestic building work contracts", and s36 is the only section in it. CBS uses the phrase "cooling off" in the Form 1 notice handed to every owner. The statute does not.

That is not a naming quirk. SA built its right as a termination power with a court clean-up behind it, rather than as a walk-away window with a fixed forfeiture attached. The structure changes what a builder can keep and how long the exposure lasts.

How long, and running from when

Section 36(3) lets the owner cancel before "the prescribed time". Section 36(5) defines that term in two limbs.

The first limb is the end of five clear business days after the making of the domestic building work contract (s36(5)(a)).

Read the trigger carefully, because this is where the states diverge. The SA clock runs from the making of the contract. It does not run from the day the owner receives the signed copy, and it does not run from delivery of the Form 1 notice. "Clear" business days means the day of making and the final day sit outside the count.

The second limb has no clock at all

Section 36(5)(b) is the provision that makes SA unusual. Where there has been a failure to comply with any of the requirements of Division 1 or Division 3 in relation to the contract, the prescribed time becomes the time of completion of the building work under the contract.

Division 1 is the contract machinery: s28 formalities, s29 price and price labelling, and s30 payments. Division 3 is building indemnity insurance.

So a missing Form 1, an unlabelled variable price, an unlawful advance payment or a late insurance certificate converts a five day window into a right that stays live until the job finishes. CBS states it in the same terms: the cooling off period may be longer if the builder failed to supply the Form 1 notice or failed to take out a policy of building indemnity insurance.

There is no cap on that limb. On a twelve month build, a Division 1 slip on day one is a twelve month exit right.

How the owner exercises it

Section 36(3) requires an instrument in writing signed by the building owner. The section recognises two delivery methods and no others: personal service on the contractor, or posting in an envelope addressed to the contractor by the postal method the section names. Email does not appear in the section.

The timing rule matters more than the method. The contract is taken to have been terminated at the time the notice is served or posted. Not received. An owner who posts on the final day has already cancelled, and the builder finds out afterwards.

What the builder gets to keep

Nothing automatically, and this is the real point of difference.

Section 36 names no forfeiture figure and no percentage. It does not let the builder retain the deposit. Section 36(4) instead sends the parties to the Magistrates Court, which may on application by either party make such orders as it thinks just, either providing for the return or repayment of the whole or part of any consideration given by the owner, or providing for payment to the contractor in respect of materials supplied or building work or other services performed.

The builder is not paid a set cancellation fee. The builder applies and argues value. CBS frames the owner's side the same way: you can opt out during the period without penalty, but you may still be liable for materials or services supplied before you terminated.

Waiver and the exceptions

There is no waiver mechanism. The Act contains no solicitor's certificate procedure and no consent form that shortens the period. Section 42 goes further, making void any purported exclusion, limitation, modification or waiver of a right conferred by the Act, which catches a contract clause drafted to sign the right away.

The exceptions are narrow. Section 36(2) excludes minor domestic building work, which regulation 4 now fixes at a cost to the owner of less than $20,000. Section 36(1) limits the section to contracts entered into on or after 1 May 1987.

For contrast, Western Australia has no statutory cooling-off period for home building contracts at all. SA has one. It starts at signing rather than at delivery of documents, it hands the builder no fixed retention, and it does not close on time if the builder's paperwork was wrong.