What to do when a property settlement is delayed
Published 17 Sep 2018
Buying a home is no easy feat - once reaching the settlement date, you'd be forgiven for assuming the hard part is done. But a delay in settlement can be a major headache for both buyer and seller, and it's a complicated part of property law. Here's a guide on the steps to take if this happens.
What is the property settlement date?
In NSW, three stages must be completed before a property can legally change hands:
- All parties must sign and exchange contracts, and the vendor is paid a deposit.
- The buyer then has a five business-day cooling-off period. This starts as soon as contracts are exchanged and ends at 5 p.m. on the fifth business day. During this period, either party may break the contract as long as they provide written notice.
- Finally, the settlement day takes place around six weeks after exchanging contracts.
The settlement date is the final step in this purchase agreement, and at this point the purchaser assumes legal responsibility of the property.
What do I do if the property settlement is delayed?
There are a number of reasons the property settlement date could be postponed:
- The buyer lacks the financial capital to pay for the balance of the sale.
- Either party identifies a major error in the conveyancing documentation or contract.
- The purchaser identifies an issue with the property upon final inspection.
Both vendor and buyer have rights to legal recourse and even compensation if the other party fails to meet their end of the agreement.
Three steps for a vendor to take
If the settlement date is delayed, vendors should:
- Recheck the contract for the penalty interest rate clause - adding to the sale price - and act on it.
- Send a Notice to Complete. This is a legal order that provides buyers with extra time to settle. If unsuccessful, sellers can tear up the agreement and keep the deposit.
- Contact a property law solicitor to ensure all the right legal steps are taken.
Three steps for a buyer to take
Buyers have less legal power in NSW when it comes to settlement delays, but can still:
- Make contact with the seller as soon as possible to make them aware of the delay.
- Use a Notice to Complete to force the seller to act. If this time period is breached, the buyer is able to void the contract of sale and demand a refund of their deposit.
- Secure the services of a legal expert to help even the playing field in case the property settlement delay needs to be settled in court.
Securing expert legal assistance
Neither party has to accept a delay in the property settlement date. You deserve a fairer deal, and could even secure compensation if the other party in the sale doesn't meet their legal obligations.
Want more information on the conveyancing process or the legal side of property sales? Contact Malouf Solicitors for help today.
Please call us on 02 8833 2000 to speak with a lawyer
I would just like to say thank you to Anthony who assisted my son in his matter. He is a first home buyer and was pressured into signing a contract prior to obtaining legal advice. The contract was certainly was not the normal straight forward type. To be able to obtain the help and assistance he did from Anthony and rescind the offer the next day, was wonderful. We were able to have a stress free Christmas. I am unable to thank him enough for this. My son and our family will be contacting Anthony when we find the next property.
Kim of Sydney