Cooling-off rights for VIC residential building contracts

What the cooling-off period is

The cooling-off period is a statutory right for a Victorian homeowner to rescind a major domestic building contract within a short window after signing without having to give a reason. It exists to protect homeowners from pressure-sale tactics and from signing a contract they have not had time to consider. The right is set out in section 34 of the Domestic Building Contracts Act 1995 (Vic) and applies on top of any cooling-off provision in the contract itself.

When the cooling-off period applies

Cooling-off under section 34 applies to a major domestic building contract: a contract for domestic building work where the contract price exceeds $10,000 incl GST. The threshold matches the registration threshold under the Building Act 1993.

Below $10,000, statutory cooling-off does not apply, though the contract may still include a contractual cooling-off period of its own. Certain contract types are also excluded (off-the-plan purchases and some other defined categories under the Act).

How the period runs

The cooling-off period is 5 clear business days. The window opens when the homeowner is given a copy of the signed contract, not when the contract is signed. As in NSW, this matters because contractors who walk away with the only copy of the signed contract leave the cooling-off window paused until they deliver the homeowner a copy.

"Clear business days" excludes the day the copy is received, weekends and Victorian public holidays. A copy delivered on a Friday gives the homeowner until end of business the following Friday to rescind.

How rescission works

To rescind under section 34, the homeowner gives written notice to the builder before the cooling-off period expires. The notice does not need to use any particular form but must clearly state that the homeowner is rescinding the contract under section 34 of the DBCA. Email and post are both acceptable. Verbal rescission is not.

The contract is taken to be rescinded from the time it was signed. The builder must refund all money paid under the contract, less the cost of any reasonable out-of-pocket expenses incurred before the rescission (such as a site survey or design work commissioned before the rescission notice). The deduction must be evidenced.

Extended rescission if the cooling-off statement was missing

The DBCA requires the contract to include a cooling-off statement informing the homeowner of their rescission right. If the builder failed to include the statement (or included an incorrect statement), section 34 allows the homeowner to rescind the contract for an extended period after the contract was signed.

The extended right is a significant exposure for any builder using a non-current contract template or omitting the prescribed statement. The remedy is the same as under standard rescission, but the window can run for substantially longer, potentially across work already begun.

Comparison to NSW

Victorian and NSW cooling-off regimes are similar in structure but differ in detail.

Victoria: 5 clear business days under DBCA s 34 for major domestic building contracts (over $10,000 incl GST).

NSW: 5 clear business days under HBA s 7BA for residential building contracts over $20,000 incl GST.

Both jurisdictions extend the rescission window where the statutory cooling-off statement is missing.

The Victorian threshold catches more contracts because $10,000 is half the NSW threshold. A small kitchen renovation at $12,000 in Victoria carries the cooling-off right; the same contract in NSW does not.

Practical implications for builders

Three habits keep a Victorian builder on the right side of section 34.

Use a current contract template. HIA and Master Builders Victoria forms include the prescribed cooling-off statement. Older templates may have outdated content that does not satisfy the DBCA requirements.

Give a copy of the signed contract to the homeowner the same day it is signed. Record the date and method of delivery. A signed acknowledgement of receipt removes any later argument about when the window started.

Do not start work, take a deposit beyond the deposit caps or order materials before the cooling-off window has closed. Work performed inside the window is reimbursable only as a reasonable out-of-pocket expense if the homeowner rescinds.

Related entries

The major-domestic-building-contract threshold ($10,000) that triggers cooling-off is the same threshold that triggers VBA registration under the Building Act 1993 (see builder-registration-classes-vic). The statutory warranties that run regardless of rescission are in statutory-warranties-dbca-vic. The NSW equivalent is in cooling-off-residential-building-contracts-nsw.