When your settlement is being delayed, this is a big problem. There are too many things to look after when moving home, and if the date shifts, the same work you’ve already done arranging everything around your settlement date doubles or triples.
What’s more, nobody is expecting this to happen, so when it hits – it hits people hard. If a buyer is renting a house, while he’s waiting for his settlement date, a delayed settlement (by vendor) means that he needs to extend his lease, which may not be that easy on a couple of day’s notice, re-arrange the removalist, re-arrange the disconnection and re-connection of the utilities, re-arrange the redirect of mail, take another day off at work, etc. These are just a few examples of the amount of pain a delayed settlement can put you through. And the first reaction to a situation like this is a question:
“Can they really do this to me? What are my rights here?”
A couple of days ago I received a letter from a first home buyer who was asking these questions, and decided to write a short explanation of buyer’s and vendor’s rights, because there sure are more people out there, wondering what their rights and options are in a delayed settlement.
Delayed settlement – from a buyer’s point of view
Buyers need to know that most contracts allow the vendors delay the settlement for 14 days past the settlement date without a penalty. There is a particular clause, which you can easily find – if you know what to look for.
Also, as a buyer, you’d want the contract of sale to specify what you’d like to happen if the vendor delays the settlement beyond those 14 days – in case you decide for the vendor to settle, as opposed to taking him to the court or terminating the contract and claiming back your deposit.
Make no mistake – if a buyer delays a settlement, most contracts of sale make sure vendor’s interests are covered, by charging the buyer default penalty rates. There is a specified period during which the penalty interest rates are charged, and after that it gets worse, as a vendor can cancel the contract and sell the property to someone else. To give you an estimate of costs, I have heard of buyers paying from $1000 to $5000 for a delayed settlement.
I’m sure you won’t like hearing this, but there are even more costs a buyer can incur if they are at fault for the delayed settlement – the conveyancers / solicitors can charge a client extra if the settlement doesn’t go through as planned. Some even would go to the extreme of abandoning clients when things are not going smoothly, and while I wouldn’t wish this to my worst enemy, I still feel that people need to know these things.
Have you ever experienced problems because of a delayed settlement? Share your story – leave a comment here.
{ 16 comments… read them below or add one }
I have signed contract of sale to sell our house two months back. Settlement is after 7 months.
We both are unemployed and have incurred losses. We want to move back to our house.
Can we request Buyer to cancel the contract. We are ready to pay the fees.
URGENT Reply is requested.
Hi Munish,
I am not a lawyer but I’ve heard of cases where people in your situation were negotiating with the buyer to have the contract of sale canceled. You would need to compensate the buyer for expenses he / she incurred up to this moment, such as the building and pest inspection, the property evaluation (their bank will probably make them pay for it if their loan was approved), legal fees they paid, etc. If you don’t have a solicitor, get one and get them to negotiate on your behalf with the buyer’s solicitor.
Good luck, I hope you succeed. Let me know how you go, maybe there’s something else I can do for you.
Cheers,
Chris Lang.
Hi, i am a buyer and the vendor delayed settlement on the property. We were meant to settle on the 20th of Novemeber, however according to our solicitor, he has got until the 16th of December for the property to be settled before we can exit the contract is this correct? We did actually settle on this property yesterday the 16th at 4:45, but i’m really angry at how long the buyer had before he had to settle. During this whole process the solicitor told us that she didn’t think the property would go through and to start looking for another, which we did. We found another property which we absolutely loved and we were hoping the original property would fall through. Unfortuneatly it didn’t and now we have a property we don’t want…
Were feeling really ripped off.
regards
Bec
Hi,
I am a seller of a property. After settlement
date, how long can the conveyancer or vendor’s
lawyer hold on to my money.
hi
if there is a contract in place that states settlement is on the 3rd of december and the buyer does not settle because the property they purshased has been delayed for some reason is there anything that i can do to make them settle?
can i request them to pay me rent until they are ready to move on to their new home?how long can they do this (SQUAT)for without me having to terminate the contract ??
thanks
Hi Roman, the answers to these questions should be in your contract. The thing is that there are no laws that apply here, the contract should define all the possible situations and the outcomes. If the contract doesn’t say anything and you are suffering losses because of this ridiculous situation, contact a lawyer and seek professional advice.
hi
i have found a buyer for own home but he wants a delayed settlement (6 months) which suits us
how much deposit is given in these circumstances and do i get access to this deposit straight away
regards peter
Hi Peter,
Normally the deposit is negotiable, 5%-10% would be pretty standard, but as far as I know the seller doesn’t get access to the deposit before settlement. The deposit goes in to a trust account of the real estate agency and is kept there till settlement day (in VIC).
Cheers,
Chris
Hi,
I just settled on a property that had settlement delayed 4 times. It was delayed by myself because the contract stated vacant possesion yet each time settlement got close i found that the tenant was still there. I have since found that i have been charged for each of these times. What can i do about this? the contract stated vacant possession shouldn’t the vendor have been charged as it was their fault for not evicting the tenant?
Hi. i am concerned about the settlement of my house. i have decided to buy this newly constructed duplex and i have paid the 10% of the house in december and the owner still has not launched the settlement for 10 months and i am in the 11th month. what is happenning please tell me.
Hi. i have purchased a property nearly one year ago but the settlement still hasnt taken place yet. i have purchased a duplex and the owner told us that the land had to be seperated and the council had to go over it to give the house a torrens tittle. Normally it is supposed to take six months and i have been waiting for 10 months and this is the 11th month. the owner is not mentionig anything about the houses settlement as though he doesnt want to sell it to us. is there any chance of him not doing the settltment by law. i know that he has got two choices he can either do the settlement or refuse selling the house and give back my stamp duty and the 10% of the price of the house i have payed. i dont know what he is trying to do but he wont launch the settltment of the house. do you have any clue about what is giong on in this situation. i would appreciate it if you please send me a reply to my email.
Hi,
We have just been informed that settlement will be on 15th Dec.and we will receive a cheque for most of the money but the real estate agent is keeping the deposit until early Jan. and then we will receive a further cheque. Sounds a dodgy set up so the agent gets interest and the solicitor has an extra job to do.How does this work? I was under the impression that settlement day meant all matters were finalised.
Hi Steve,
It really sounds unusual. Have you asked your solicitor about this? Perhaps they can get in touch with the agent and talk some sense into him?
hi just a quick question which is left us a bit confused.
Our property was due for settlement on the 20th Jan, all solicitors were in agreement as was the vendor and real estate agency.
It is now three days away from settlement and we have rung the real estate to organise a pre inspection of the property vacant.
During the conversation, the real estate informs us that the current tenant, is not leaving the property till the 30th which has left us in abit of a dilemma, regarding removalists, our current rental termination, finance and somewhere to live for a week.
The Vendor and his solicitor, had no idea, that this was going to happen it is pure fault of the real estate agent.
In this situation what can we do?
cheers
Hi there, I really have big problems with the property I am willing to purchase. I went to look at the property which there are some damage at the wall as I can see. I put a verbal offer to the Agent rep, the Agent rep has been taken me to his office and gave me a contract of sale to sign. I really don’t understand the process and my english reading is really poor. I asked the real estate agent about this contract. He said it just an offered not a contract, so I sighn it. Day after the agent called me up and asked for increase more money if I want this property because there is some one offered more. So I agreed for new price by verbal.
After that the agent sent me the copy of contract of sale which I take a notice that the vendor agreed to sell the property since my first offered, but the agent has been took the first page which have my signature off and put in new price in second page. So I called the agent up then the agent agreed to changed the price back to my first offered.
Then the agent asked me about the convenyancing which I really don’t know anyone or process of buying property. So I told the agent that I have not arrange any convenyancing yet. The agent has recommended me one of the convenyancing, so I decided to use the one that the agent suggested
After the convenyancing contract was signed and I have paid all the convenyancing price then I find out later that the conveyancer which I used, is the same one which the vendor used.
The conveyancer asked me to pay all 20% deposit plus stamp duty and council Rate for the property 6 month in advance which the property have not been settlement yet.
Before settlement date as agreed in the contract, the vendor asked for delay the settlement date many times (supposed to settlement on 25 Dec 2011). I really surprised, I asked the convenyancing of the reason which the answer from the convenyancer was one of vendor partner was pass away years ago, so he is not ready to settlement yet.
The agent also keep asking me to fixing the property which not belong to me yet. I have been talked to one of my friend about this issues, my friend told me that there are something not right. My friend suggested me to get the lawyer and don’t use the same convenyancing as vendor used. So I hired a lawyer to act for me.
The lawyer has been informed me that the house price is $5,000 lower than I offered. The contract of sale is fraud, there is only one vendor signed but the title belong to two person and there is no proove of the vendor Decease.
After I hired the lawyer, then she told me that I cannot avoid this contract. I still have to purchase this property.
The lawyer has been arraged the settlement date for me on this coming friday. My friend told me that I have right by law to inspect the property within 7 daysbefore settlement date. So I called the real estate which the agent refused to let me inspect the house. I asked my lawyer which she also cannot help me. So I asked my friend which my friend helped me by called direct to complaint to consumer affair. My friend also help me write the letter to the director of that real estate agent. After that the agent called me up with angry sound and send me letter which dated 3 days ago to let me inspect the house in same day of his letter date. ( I received the letter yesterday) I really confused how can they do that? Are they right by law to trick and steal my money in this way.
I also got the letter from vendor convenyancer (my previous convenyancer) for panalty of delay settlement from date in contract (26 Dec 2011 to Feb 2012)
I really wondered that what I have done wrong, the vendor is the one to move the settlement date. I have been paid all full amount deposit plus stamp duty plus 6 month in advanced of council rate!!!!
Sorry for this long story, I really need help urgent and go to the right track
Please suggest me what shall I do?
- Is it legal for convenyancing to charge my stamp duty plus 6 months council rate in advanced before settlement?
- Do I have to pay panalty of delay settlement which cause by vendor?
- Is it legal that the real estate agent recommended me to use same convenyancing as vendor?
- Am I have right by law to bring the house inspector to inspecting the house within 7 days before settlement?
- I just find out last week that the property was fired prior and the roof was sagging. Also the property used to grow drugs on the roof. Do I have any right by law to cancel this contract.
Thank you very much for your help, it is really urgent due to settlement will be this Friday 3/2/2012
Yours sincerely
Pornpan
Hi Pornpan,
This is just an unbelievable mess the lying estate agent and sneaky vendor have got you in.
- Stamp duty is payable after the settlement, as far as I know
- Read your contract of sale. If the vendor is the cause of delay, common sense says you should not be paying penalty rates. But the contract of sale should have a clause explaining the Vendor’s and the Purchaser’s rights in that regard.
- real estate agent can recommend any conveyancer, it is legal for you to use the same one as the vendor, but does create a conflict of interests.
- A standard contract of sale from REIV says that you have right to inspect the house any day within 7 days prior to settlement (try to find that clause in the contract)
- I am not sure about ending the contract at this stage without losing the deposit – you really need a lawyer to answer this question and explain all the consequences.
Please keep us posted on how this works out for you. Good luck!