The answer is yes. Settlements unfortunately can be delayed and for multiple reasons, reasons ranging from financing or legal issues to problems with the property. Problems with the property can include final inspection issues, the property not being vacant if being sold with vacant possession, removalists not showing up etc. Penalties can be imposed if a settlement is delayed which can vary for each settlement or scenario and that all depends on the contracts terms and conditions, and can include additional costs or complete cancellation. A good conveyancer will help you understand how to complete the process within the settlement time frame so that these points can hopefully be avoided. At Ezystep, we will go above and beyond to ensure you have a smooth and easy settlement process.
A few things you need to know about the conveyancing process and how it can help you navigate your house settlement.
How long can settlement be?
Usually, settlement dates can be between 28 days and up to 90 days, however these need to be negotiated at the time of signing the contract.
What Happens if You Don’t Settle on Time?
Failure to settle a property within the stipulated time frame can cause both legal and financial troubles. Vendors have the right to pursue legal action and financial damages, including recovering their initial deposit and cancelling the contract altogether.
In some cases, a vendor may also sue for damages. This can include the court ruling the buyer must settle.
Can it Cost You Money if You Delay Settlement?
Yes, in general, failure to settle on time can absolutely cost you money but house settlement problems and the laws governing them vary between territories.
Unfortunately, sometimes a party might be responsible — and thus liable — for a delayed settlement compensation through no explicit fault. Delays can happen because of acts of God, bank processing errors, and other mistakes.
This can be costly and frustrating. It is one of many reasons why you need a good conveyancer guiding you through the process — for best results, one who is familiar with the laws of your territory.
In NSW, time is generally not of the essence and both parties could require settlement by serving a Notice to Complete calling for settlement within a reasonable period.
Is it Common for Settlement to be Delayed?
It is not often settlements are delayed past the due date, however, the likelihood of a delayed settlement is much higher if there are serious issues with the property. Similarly, bank issues such as paperwork delays or reworking increase the likelihood as well.
Other potential issues include:
1. Bank administering errors or issues
Bank processing errors are one of the top causes of settlement delays. Buyers must file a home loan application and have it approved. Meanwhile, vendors must file to discharge their old mortgage in order to transfer property ownership.
The settlement process can’t be complete until these applications are accepted and processed. If either party fails to submit paperwork on time or the applications have errors, approval can be delayed, affecting the settlement timeline.
2. Final Inspection issues
Inspection issues are another cause of settlement delays, and they can happen right up until the end of the time frame. If there are last-minute repairs or inspections that lead to a serious problem being discovered, this can cause a delay in the property sale.
Depending on the terms of the contract, the vendor may be liable for the damage it unreasonably causes between the contract date and settlement… If this is the case, the settlement may need to be delayed until this can happen.
3. Inability to Sell Another Property
In some cases, a settlement depends on another property being sold before it can be complete. This can easily cause delays, with one settlement affecting the other. This often happens when buyers want to sell their current home and use the funds to buy a new home and there may be a chain of settlements affecting this and if your settlement is the last settlement in the chain or middle they all will need to settle at the same time.
4. Seller Delays
Vendors may also cause a delay in settlement. This is often because they or a current tenant have not vacated the property, which is often a contractual stipulation to the completion of the settlement. In a small number of cases, local authorities may need to serve an eviction notice.
At Ezystep we pride ourselves in ensuring we hold your hand throughout the process and educate you with the knowledge you need to know to ensure any risk for delays are minimised.