Whether you’re a buyer or seller, just because the Contract of Sale is signed doesn’t mean the property purchase/sale is a done deal.
Settlement is the final important step in the home buying or selling process. At settlement, the ownership of the property is legally transferred from the Seller to the Buyer. Your Conveyancer or solicitor will coordinate the settlement where the final documents of the sale will be exchanged and the balance of the purchase price is paid to the Seller.
A delay in settlement can be both personally and financially stressful for both parties and the rules and regulations differ depending on the state or territory and the terms specific to your Contract of Sale.
What can cause Settlement delays?
There are many reasons why a settlement might be delayed. The most common reasons include:
- Bank complications – either party is late returning documents, paperwork is inaccurate or incomplete, or there is a backlog of loan applications for processing.
- Late documentation – either party is late returning paperwork to their conveyancer.
- Final inspection issues – the buyer discovers an issue during the final inspection of the property that the Seller needs to rectify.
- Difficulty settling another property – a contract may be dependent on the sale of another property to move forward.
- Property vacating issues – the Seller or tenants have not yet moved out of the property.
For Buyers: What happens if Settlement is delayed by the Seller?
When you purchase a new home, you (the Buyer) need to make plans to sell or move out of your previous residence. A settlement delay caused by the Seller can not only be stressful, inconvenient and may also mean you don’t have a place to live for a period of time.
Depending on the state you’ve purchased in and the terms and conditions of your Contract of Sale, your rights as a buyer can vary. We’ve outlined some general guidelines for each state below, but you must discuss your specific options and next steps with your conveyancer.
In Queensland, if the Seller delays the settlement process a buyer may be able to (dependent on the terms of the contract):
- Allow the extension and wait for the Seller to be ready
- Allow the extension but charge default interest for extra days
- Refuse to agree and terminate the contract and/or sue for damages
In Victoria, if the Seller delays the settlement process a Buyer may be able to (dependent on the terms of the Contract):
- Allow the extension and wait for the seller to be ready
- Allow the extension and negotiate a Licence Agreement for early occupation
- Terminate the Contract after a 10 day delay
- A Buyer does not have the right to claim penalty interest
New South Wales
In New South Wales, if the Seller delays the settlement process a Buyer may be able to (dependent on the terms of the Contract):
- Issue a Notice to Complete, giving the Seller an extended time (usually 14 days) to settle
- Terminate the Contract and retrieve their deposit if the seller fails to meet the Notice to Complete
- Buyers are not usually able to claim penalty interest
Settlement Delays in Other States
Depending on the terms of the Contract, if a Seller delays the process settlement:
- In Western Australia, the Buyer is required to wait for three business days before they can charge the Seller penalty interest.
- In Tasmania the Buyer can issue a Notice to Complete, giving the Seller an additional two weeks. After those two weeks, they may terminate the contract and claim losses incurred.
- In South Australia, the Buyer is not obligated to agree to the settlement day, but changes to the date can only take place when both sides agree. The Buyer can issue a written notice giving the Seller three business days to rectify the issue. If the Seller fails to settle after that, the Buyer has the right to impose penalty interest.
- In the Northern Territory, the Buyer may issue a written notice giving the Seller 10 working days to rectify the delay. If they fail to do so they are required to pay back the buyer their deposit plus interest at the rate specified in the contract.
For Sellers: What happens if Settlement is delayed by the Buyer?
Depending on the state you’re selling in and the terms and conditions of your Contract of Sale, your rights as a Seller can vary. We’ve outlined some general guidelines below, but you must discuss your specific options and next steps with your conveyancer.
In most states, if a buyer delays settlement, a Seller can:
- Give the Buyer an extended time (usually between 10-14 days) to settle
- Give the Buyer an extended time (usually between 10-14 days) to settle and charge default interest for each day settlement is delayed
- If the buyer fails to rectify delays during the extended timeframe, the seller can terminate the contract, keep the Buyer’s deposit and/or sue for damages
Are you looking to buy or sell in Victoria, New South Wales and/or Queensland? Impériale has Conveyancers across all three states that can assist you through the buying or selling process. When it comes to settlement, it’s important to have an experienced conveyancer on hand to reduce the likelihood of delays and advise you on what options are available to you if there are any delays. Get in touch with us today to discuss how we can help on your next property journey.
The content of this article is intended to provide a general guide to the subject matter and is not intended to be legal advice. Specialist advice should always be sought about your specific circumstances.