What happens if I can’t settle my conveyance on time?

By June 17, 2020Conveyancing

Dates are something that cannot be ignored in your purchase or sale of real estate as they are an essential part of the contract. After finding the perfect property, there may be a sense of relief after the offer has been accepted and the property hunt is finally over.

Sometimes a buyer may need an extension to ensure that they have appropriate finance to settle or there may be a special condition that a party cannot meet by the set date in the Contract, and as a result, extensions may be requested.

In Queensland, time will always be of the essence. What this means is that if parties do not perform their duties on time then they may face legal consequences. If you cannot meet a contract condition or settle on time, the most common option will be for you to instruct your solicitor to request the other party to extend the condition or settlement date. Should they agree to the request, then a later date to meet your obligations will be set and you will not have breached your contractual obligations. Unfortunately, there is no obligation for the other party to agree.

When will settlement happen?

The date of settlement will be stipulated within the contract and will usually be a specific number of days from the Contract Date e.g. 30 days or a specific date. The date of settlement will automatically default to the next business day should the settlement date fall on a weekend or public holiday. Generally, settlement will take place between 9am to 4pm. The actual time of settlement will be agreed on between the parties’ solicitors and financiers.

Conditions on Extensions

If both parties agree to an extension, then it may be as simple as that with no repercussions.

Sometimes the other party may agree but with some additional conditions such as:

  1. Enforcing default interest on the balance purchase price that the buyer must pay up until the adjusted settlement date. This default interest rate is detailed in your contract.
  2. Leaving settlement adjustments (property rates, water consumption charges, body corporate contributions etc.) as at the first settlement date, which means that the purchaser pays adjustments for the extension time frame when the seller still owns the property.
  3. Requiring the buyer to pay the seller’s additional legal fees resulting from the extension.

Extension not granted –  What are my options?

For buyers who request an extension of the settlement date and it is not granted the Seller can:

  1. Terminate the Contract and do any of the following:
    1. Take back possession of the property (if the buyer has previously been given early possession);
    2. Claim any interest paid on the deposit as well as the deposit itself;
    3. Seek damages from the buyer; or
    4. Resell the property and recoup the difference in resale price and costs of reselling the property from the buyer of the original contract.
  2. Affirm the contract and sue the buyer for:
    1. Damages;
    2. Specific Performance (which forces the buyer to go through with the contract and settle); or
    3. Both damages and Specific Performance.

For sellers who request an extension of the settlement date and it is not granted, if the Seller is unable to effect settlement on the original settlement date, the Buyer can:

  1. Terminate the Contract and do any of the following:
    1. Receive a refund of their deposit; or
    2. Sue the seller for damages.
  2. Affirm the contract and sue the buyer for:
    1. Damages;
    2. Specific performance; or
    3. Both damages and specific performance.

These are only worst case scenarios but it is always important to be prepared in case things don’t go to plan. The best way to avoid this is with appropriate legal advice to ensure your conveyance goes as smoothly as possible.

If you have any question or need advice on a contract please contact a member of our property team.