Property transactions are one of the biggest transactions – if not the biggest transaction – people do in their life. It’s important to make sure you have taken and completed all appropriate steps to ensure its smooth sailing from the time you sign the contract, all the way through to settlement.
Settlement is a key step of a property transaction as it ties the conveyance together and completes the transfer of ownership (how exciting!) – so it’s quite important that there are no delays. Unfortunately, delays to settlement can occur, be costly for all parties and are just outright frustrating.
Now, let’s dive into why settlements get delayed – whether you’re selling your home or buying a new one!
What happens on settlement?
The seller and buyer – usually their representatives – and any banks involved, essentially come together and ‘handover’ documents and money between each other to transfer legal ownership of a property.
It seems simple, right? In reality, it can be very time consuming and at times, not straight forward. All parties – even banks – are reliant on each other to ensure the settlement is smooth sailing, and this can involve many steps.
Can settlement be delayed?
Although most transactions involve a binding contract of sale, the settlement date can still change, whether it be agreed between the parties or included in the contract. Keep in mind, if a party wants to change the settlement date and there are no contract terms permitting them to do so, you are not obligated to agree.
Delays can occur due to various reasons such as financial issues, property-related problems including disputes between the parties, documentation delays, natural disaster events (on occasion), and even death.
What happens if settlement is delayed?
Now, let’s get serious. What happens if settlement has been delayed?
In a straightforward situation where settlement is delayed by one party, the party that delayed settlement would effectively be in breach of the contract terms, triggering rights of the other party. Contractual rights are in place to protect the interests of the parties, so you should obtain advice from your solicitor on any rights and obligations you have if you or the other party delays settlement – even if you anticipate there will be a delay.
It’s very important to note that any delays by your bank, representative or other third parties involved on your end, contribute to your settlement delays. It’s vital to keep in regular contact with these people to ensure smooth sailing to settlement.
Settlement Extensions in REIQ Contracts for QLD Properties
The standard contract of sale used in QLD is the REIQ contract prepared and issued by the Real Estate Institute of QLD. The most recent contract – and some previous editions – include a standard condition that allow either party to extend the settlement date for up to 5 business days after the scheduled settlement date, without providing a reason nor agreement by the other party. It’s important to note that this does not allow each party 5 business days – it’s combined – so if one party uses a day, there are only 4 days left to use between the parties.
It’s important you obtain legal advice about your contract terms.
What can you do to ensure settlement is not delayed?
It’s very important that you diarise all key items and dates for your property transaction, which will give you peace of mind. Keep in regular contact with your representative, bank and other third parties to ensure any outstanding items are met and you can complete a fast settlement. You should always ensure these people are aware of any key dates and aspects of the property transaction.
It’s important that you ensure all relevant parties to your transaction are aware of each other and included in any relevant documentation.
How do we fix settlement delays?
Solicitors are helpful to ensure you have a smooth and fast settlement – but you also play a big part.
When it comes to settlement delays, not only are they helpful, they are also crucial to provide you with legal advice, setting out all your rights and obligations, navigating you through a scary – and at times, overwhelming – process.
Whenever in doubt, ask your representative!