There are many reasons why a settlement might be delayed. These include anything from financing or legal issues to problems with the property. The penalties for a delayed settlement will vary depending on where you live and which party caused the delay, but these can include additional costs or complete cancellation.
A good conveyancer will help you learn how to complete the process within the settlement time frame. Here is what you need to know about the conveyancing process and how it can help you navigate a house settlement.
How Long Can You Ask for a Settlement?
Usually, the settlement date for a property is 30 to 90 days. Individual settlements may stipulate a shorter or longer timeframe. The infographic on the conveyancing process shows the timeline from start to finish.
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.
What Happens if Settlement is Delayed in Queensland?
So what happens if the vendor delays settlement? In Queensland, the law states that buyers do not have to agree to vendor requests to delay the settlement.
You may be able to send an official notice to the vendor on the agreed-upon settlement date, indicating that you are ready, willing, and able to settle. Stipulate that failure to settle by the set date will result in a termination of the contract and a lawsuit.
Queensland law also allows for the possibility of the buyer agreeing to the extension under the stipulation that they are paid default interest for the extra time.
These possibilities will depend, among other things, on the details of your contract. A good conveyancer will help you draft any necessary notices, make a conveyance calculation for proposed interest rates, and help you understand the legal actions to which you’re entitled.
What Happens if Settlement is Delayed in New South Wales?
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?
Our estimates of delayed settlements put them at less than 5 per cent. 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:
Bank Processing Errors
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.
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.
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.
Errors in Filing Paperwork
The conveyancing process involves many types of paperwork, from contracts to bank filings, Transfer of Land documents, and much more. Some of these must be submitted to local authorities, while others go to the bank.
If either party fails to submit their paperwork properly or in a timely manner, this can cause delays in the settlement.
One of the simplest but most vital parts of filing paperwork is to make sure that the names of all parties are filled in correctly and written in the correct places. A small error like this on a mortgage document, for example, can lead to the bank needing documents and approvals to be completely refiled. A misprint of a name in an initial document can cause it to be recorded incorrectly in the whole bank system, which can cause serious headaches and delays.
Discrepancies in valuations can also cause settlement delays where contracts are subject to valuations. A formal inspection may come up with a valuation that doesn’t match up to the contract purchase price. In this case, negotiations will need to resume as the buyer weighs their options. They may even need to access other funds to make up the difference in cost. This can also lead to new mortgage applications, which cause even further 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.
What Else Should You Know About Transferring Property?
Also, our Instant Quote tool can help you calculate the costs of conveyancing services, including what will come out of your pocket and what the government may cover.