Settlement Day Delays: What to Do When Things Don't Go to Plan
Settlement day is often circled on the calendar with excitement. After weeks of inspections, negotiations, and paperwork, you're finally about to get the keys to your new home or receive the funds from your sale.
But what happens when settlement doesn't go as planned?
Why Do Settlement Delays Happen?
Even with careful preparation, settlement delays occur more often than many buyers and sellers expect. Some common reasons include:
Banking and finance issues
Lenders may not have funds ready on time, or last-minute documentation requests can cause holdups. This is particularly common when purchasers are relying on the sale of another property to fund their purchase.
Outstanding requirements
Sometimes conditions of the contract haven't been fully met. This might include repairs that were agreed upon, or documents that haven't been provided.
Title problems
Issues discovered during final title searches, such as unregistered easements or caveats, can halt proceedings until resolved.
Simple miscommunication
With multiple parties involved (buyers, sellers, banks, conveyancers, and real estate agents), sometimes wires get crossed.
What Are Your Options If Settlement Is Delayed?
If you're the party ready to settle and the other side isn't, you generally have several options depending on your contract terms:
1. Agree to an extension – Often the simplest solution if the delay is minor and both parties are cooperative.
2. Issue a Notice to Complete – This formal notice typically gives the defaulting party a set number of days (usually 14) to complete settlement.
3. Claim penalty interest – Most contracts allow the ready party to claim interest for each day settlement is delayed.
4. Terminate the contract – In serious cases where the other party cannot or will not settle, you may have the right to end the contract and pursue damages.
The right approach depends on your specific circumstances, the terms of your contract, and what outcome you're hoping to achieve.
How to Protect Yourself Before Settlement
While you can't control every variable, there are steps you can take to minimise the risk of delays:
- Stay in close contact with your lender in the weeks leading up to settlement
- Respond promptly to any requests for additional documentation
- Arrange a pre-settlement inspection a few days before, not the morning of settlement
- Have your conveyancer confirm that all parties are ready at least 48 hours beforehand
- Keep some flexibility in your moving arrangements where possible
When Things Go Wrong, Get the Right Advice
Settlement delays can be stressful, especially when you've arranged removalists, taken time off work, or have nowhere to stay. Understanding your rights and options can make a difficult situation more manageable.
If you're facing a settlement delay or want to make sure you're protected before you reach that stage, we're here to help. Our conveyancing team handles these situations regularly and can guide you through your options.
Have questions about an upcoming settlement?
Give us a call on (03) 9787 4511 or book a consultation to chat with our team.
