Hello, future homeowners and sellers! The journey toward property settlement is often a thrilling one, but sometimes unexpected roadblocks can pop up, causing delays that can be a tad frustrating. In this blog post, we’ll explore the five most common things that can cause a hiccup in settlement and what penalties might come into play.
1. Finalise your finance approval.
One of the primary culprits for settlement delays is financing issues. As a buyer if you encounter challenges securing your finance, it can slow down the entire process and could even mean you miss out on the property all together. It’s crucial for buyers to have their finances in order and promptly address any issues that arise during the approval process. The safest approach is to have a comprehensive pre-approval before you make an offer on your dream home. Double check everything and ensure you have final approval before the end of the cooling off period.
Depending on the terms of the contract, if settlement is delayed, or if the sale falls through because the buyer didn’t have their finance approved in time, the buyer might be at risk of losing their deposit or facing legal action for failing to fulfill their financial obligations.
2. Title and Ownership Searches
Title searches sometimes uncover unexpected complications, such as disputes over property boundaries or outstanding claims. Resolving these issues can take time and may lead to delays in settlement. As a vendor, it’s good practice to have all your title searches done and required documents on hand before you even list your property for sale. Thankfully, it’s as easy as asking your conveyancer to help.
Depending on the circumstances, the parties involved may need to negotiate a new settlement date. Penalties might include compensation for the delayed party or even termination of the contract in extreme cases. As a buyer, it’s important your conveyancer checks all of this for you before the end of cooling off.
3. Unforeseen Property Inspection Findings
Thorough pest, building and Strata reports are an essential part of any property purchase (check out our blog on Due DiligenceHERE for more on pre purchase inspections and reports)these inspections[AM1] [SG2] and reports can show up issues that need addressing before settlement, such as structural problems, pest infestations,safety concerns, minor repairs or Strata Plans not being adequately funded to deal with likely upcoming maintenance issues. Resolving these matters may lead to longer and more detailed negotiations and could ultimately extend the settlement timeline.
Always ask your conveyancer to check for clauses specifying responsibilities for repairs and what the penalties are for delays caused by extended negotiations or by waiting for repairs to be carried out. If you have these completed before the cooling off period expires, it gives you time to walk away from the sale if major defects are uncoverd.
4. Documentation and Administrative Delays
Errors or delays in preparing and exchanging necessary documentation can also contribute to settlement delays. This may include issues with the contract, missing paperwork, or administrative hiccups. It’s important to work closely with your conveyancer to make sure you have all the necessary documents in order before you make (or accept) an offer to buy or sell. Some examples can be finance documents, personal identification, deed and title documents and any outstanding amounts from Council or water. Thankfully, a reputable and fully licensed conveyancer will always have your back and make sure you never get caught in this situation!
Causing a delay in settlement by not having your paperwork in order can result in financial penalties for any losses incurred by the other party, or in extreme cases, termination of the contract. If you’ve rushed into making an offer because you absolutely fell in love with a property, at leas be sure this is done prior to the end of the cooling off period.
5. Unmet Conditions in the Contract
If the conditions outlined in the contract are not met on time, it can result in settlement delays. These conditions might include the completion of specific tasks or the resolution of outstanding matters. Some examples could be to undertake minor repairs, leave the property in a certain condition or even remove specific items such as rubbish from the property before the settlement date.
The contract may specify consequences for unmet conditions, ranging from financial penalties to the termination of the contract. Be sure to have your conveyancer fully explain any obligations to you so you don’t find yourself with a long list of jobs to do on the day of settlement.
Navigating the Penalty Landscape
Penalties for settlement delays are not one-size-fits-all; they depend on the specifics outlined in the contractand also how willing both parties are to negotiate if unexpected hurdles arise. It’s crucial for both buyers and sellers to clearly understand the terms and conditions, including any penalties for non-compliance.
To mitigate the risk of delays, open communication between parties, regular updates on progress, and a proactive approach to addressing potential issues are key. Seeking legal advice during the contract negotiation phase can also help anticipate and manage potential pitfalls.
Remember, each property transaction is unique, and flexibility and understanding between parties can often lead to mutually beneficial solutions when unexpected delays arise. Here’s to smoother settlements and new beginnings! 🏡✨
