Oh no – settlement is meant to be the 10th and for”¦ whatever reason”¦ it’s not going to happen on time!!
Firstly – wrap your head around the reason it’s not settling.
1. It’s the sellers who can’t settle – perhaps their bank isn’t ready to go?
Firstly, there’s no financial penalty to you in this case – but there can be an inconvenience of course. If the property is vacant and you really (really) need to be in on that date, have your solicitor or conveyancer contact the other side to see about early access, or the possibility of paying rent prior to.
2. If the sellers won’t settle (maybe they aren’t ready to move out?)
Contact your solicitor or conveyancer and see what can be done. Likely – not much, but they’re your best go to person in this case.
3. If it’s you who can’t settle as the buyer
Firstly, ask your solicitor or conveyancer if there is any penalty interest involved in your contract that you need to be aware of and listen to all their advice carefully.
Secondly, ensure they’re keeping the other side informed (and hopefully on side) about what the delay is and the reason for it.
If you can’t settle on time typically a few days worth of delay won’t cause a huge issue, but if it drags out longer, then the other side may issue you with a “notice to complete”. Again, have your solicitor or conveyancer advise you but notices to complete typically are either 14 or 21 days. This means you have 14 or 21 days to complete (ie: settle) from when the notice is put forward, or you can potentially lose your deposit and be up for costs if the property needs to be resold. This is a very rare occurrence, but stay in contact with your solicitor or conveyancer and take their best advice.
Want to read more? Here’s some helpful advice put together for us by one of our friendly solicitors:
The parties bind themselves to settle on the agreed date.
A party who wrongfully fails to settle on the agreed date is answerable to the innocent party for any losses the innocent party suffers. In the case of a purchaser who is late, the vendor may lose the chance to earn interest or may have other losses because funds are not available. Conceivably a vendor could lose substantial sums if the delay of the purchaser prejudices commitments the vendor has made relying on the purchaser being ready on time.
If a vendor is late, the failure to deliver the property on time to the purchaser may cause the purchaser to incur significant alternate accommodation costs or other expenses. Any losses resulting from a delay are offset by benefits that may also result from the delay. A vendor can claim lost interest but must reduce the claim by any additional rent received.
A purchaser can claim for the extra accommodation cost but must take account of the interest that was earned on the purchase funds pending the delayed settlement.
The person suffering the delay has an obligation to make reasonable efforts to minimise the loss.
Typically the law says that although a breach as to time gives rise to damages, it is not so serious a breach as to entitle the innocent party to call the transaction off.
It is possible to say in a contract that any delay on settlement is critical and justifies calling off the deal. This is called “making time of the essence”.
If the contract itself does not make time of the essence an innocent party can make time of the essence, by giving notice to the guilty party. This notice is called a “Notice to Complete”. This sets a deadline for settlement. The effect of the notice is to say “if you continue breaching the contract beyond a nominated reasonable deadline, your breach will be regarded by me as so serious as giving me the right to call the deal off”.
A contract may specify what time needs to be given for a Notice to Complete. The Standard Form Contract for Sale of Real Estate in Tasmania by Standard Condition 17.1 specifies 14 days as the time needed to be given for a Notice to Complete. In the absence of some provision in the contract, a reasonable time must be given usually somewhere between 14 and 30 days depending on the circumstances