Whilst not the most immediate concern of either Buyer or Seller, the Settlement Date is often the most important date in the conveyancing timeline. For the Seller, issues of mortgage release, vacant possession & completion of works (if any) loom large, whilst for the Buyer, pre settlement inspection, finance, and taking possession of the property are central issues. For either party, if their transaction is dependent or conditional or conditional on another transaction, aligning settlement dates is often essential to the matter.
In order to understand the importance of the settlement date, it is important to establish a few basics of real property transactions in Queensland:
- Settlement can take place on any business day as agreed between parties, but is usually scheduled to take place 30 days from the contract date, or 14 days for shorter settlements.
- Under the standard form contracts used in Queensland, and indeed in most real property contracts, Time is of the Essence. This means that if a thing is to be done, it must be done on the appointed date. For settlement, this means that it must take place before 4:00pm on the appointed date.
- Whilst there is limited provision for the settlement date to be extended unilaterally, it is usually only for a period of 5 business days.
If either Party were to fail to settle on the appointed day, this can invite serious consequences as remedies against the party in breach, which can include:
- Damages;
- Specific Performance; or
- Damages and Specific Performance.
If the Buyer is in breach, the Seller may also seek to reclaim their losses in having to take the property back to market.
If there is a linked transaction, failure to settle can result in the failure of that transaction as well, with the attended consequences.
It is therefore important to consider the following matters when determining the best settlement date for your transaction:
- Will my Financier/Mortgagee have sufficient time to put in place the necessary arrangements for Settlement to occur?
- Will I have sufficient time to conduct the enquires necessary to satisfy myself as to the condition of the property?
- Will I have sufficient time to vacate the property, and accommodation after settlement?
- Am I dependent on taking possession of the property on the Settlement Date, or do I have a contingency, should settlement be extended?
- Is this transaction linked to another transaction, and does either contract make sufficient provision for flexibility should settlement be delayed in either matter?
If these issues are considered at the outset of a matter many of the common pitfalls around settlement can be avoided, leading to a smooth transition into your new property.