What Happens If Settlement is Delayed by a Buyer?
During a property sale, a purchaser is often faced with a difficult question: What happens if the buyer delays settlement? While it is not always possible to avoid the delay, there are ways to deal with this issue. First, a vendor may extend the settlement date by offering the purchaser an extension of up to two weeks. However, this extension is rarely granted and in some cases, the seller may choose to extend the settlement date even longer. The purchaser has the right to terminate the contract and receive their deposit if the vendor does not meet the settlement date.
If the buyer delays settlement, they can issue a Notice to Complete to the seller. This notice gives the seller additional time to complete the contract, after which the buyer may terminate the contract and claim the deposit. However, if the seller does not agree to an extension, the buyer is unable to collect penalty interest, and may only terminate the contract if the delay exceeds ten days.
In Victoria, if a buyer delays settlement, the consequences are far worse. In some cases, the vendor may choose to charge the buyer penalty interest for each day that the settlement date is delayed. In other cases, the buyer can also demand a license agreement, which gives the buyer early access to the property. This way, he or she can move forward with the settlement. However, a delay in settlement may affect the new tenants and their plans to move in.