In conveyancing, the legal process of transferring property ownership from one person to another is a critical aspect of any real estate transaction. However, the intricate and multifaceted nature of this transaction means there are sometimes delays and hindrances to this process rolling out as smoothly as it should.
To help you navigate the process more effectively and manage your expectations, we thought it would be a good idea to explain the reasons why some of these delays might occur.
By examining some of these factors in a little more detail, we hope to provide some insight into the kinds of challenges that arise during conveyancing so that you can better anticipate them and find ways to overcome these issues.
Vendor Faults
Settlement delays are sometimes caused by the vendor. Here are a selection of reasons why this commonly occurs:
- Mortgage Discharge Delays
Mortgage discharge delays occur simply as a result of the vendor not discharging the existing mortgage on time and underestimating the fact that it can take banks up to 20 days to roll out this process.
Generally, this is caused by communication breakdowns between the vendor and the bank regarding the requirements for discharge. It could also be related to outstanding fees or penalties associated with the transaction.
In other cases, simple errors or discrepancies in the administrative paperwork prolong the process, as these need to be rectified first.
- Unprepared Property
Settlement delays can sometimes be caused when the vendor hasn’t removed all of their belongings, rubbish and other unwanted items from the property. This is in breach of the sale
Settlement delays can sometimes be caused when the vendor hasn’t removed all of their belongings, rubbish and other unwanted items from the property. This is in breach of the sale agreement and is sometimes the result of a lack of cooperation from the vendor in doing their part of cleaning and decluttering the property.
There might also be disagreements over what constitutes personal belongings or rubbish or delays in the vendor arranging for rubbish removal services to take care of the remaining items
- Incomplete Repairs
When the vendor hasn’t completed certain repairs as specified in the contract or if those repairs are of poor quality, this can cause settlement delays.
Sometimes this is simply the result of suitable contractors’ lack of availability, while in other cases, disputes between the vendor and purchaser regarding the scope of repairs or the quality could be the reason.
Additionally, there could be unforeseen complications discovered during the repair process, causing it to take longer than expected.
- Delayed Move-Out
This kind of issue is caused when the vendor still occupies the property on settlement day. This can simply be a case of bad planning, where the move-out was not arranged in time and they are still packing their goods.
In other cases, it could be because the other property they’re moving into is not ready, so they have nowhere to go.
- Vendor Delays Due to Simultaneous Settlement
When the vendor’s purchase of another property is delayed, it could prevent them from moving out of the property they’re selling on time. Any number of unexpected problems regarding the purchase transaction for another property can be the cause of this, ranging from financial to legal issues.
The delays could also be a consequence of third-party failures involved in the simultaneous settlement. Generally, better coordination between conveyors or solicitors handling both transactions can help avoid these types of of problems.
- ID Verification Issues
When the purchaser’s identification verification is still pending, it can delay settlement signing. This is usually a simple case of not obtaining the required identification documents soon enough or discovering errors and discrepancies in the identification documents that were submitted.
In other cases, changes in a person’s personal circumstances or legal status could be the cause of this delay.
Purchaser Faults
Sometimes, when settlement delays occur, it is the purchaser’s fault. Let’s take a look at some of the reasons why:
- Loan Approval Delays
When a purchaser doesn’t have their home loan application approved on time, it can lead to settlement delays. These loan approval delays could be related to submitting inaccurate or incomplete documentation for the loan application.
It could also be the result of the lender imposing additional requirements, such as financial assessments or property valuations, on the purchaser, thereby extending the process.
Other delays might be the result of sudden changes in the purchaser’s financial circumstances during the application process.
- Settlement Chain Reaction
The settlement chain reaction is when the purchaser depends on the sale of another property to obtain the funds needed to purchase the one in question. When the sale of the other property is delayed, it causes settlement delays on the current property.
These delays in the sale of an existing property could be related to market conditions or issues with a potential buyer. In truth, various complications could arise from multiple transactions within the settlement chain, ranging from disputes to outright breakdowns in sale agreements.
An inability to secure bridging finance or alternative accommodation during the settlement period can exacerbate this problem.
- Late Payment
When the purchaser fails to transfer funds into the settlement account on time, late payment can hold up the process.
However, late payment is not always necessarily attributable to the purchaser’s ineptitude. Rather, it is related to the way that banking errors or technical issues might affect fund transfers or disputes surrounding the amount of distribution of settlement funds.
Delays can also be the result of external factors such as public holidays, unexpectedly long bank processing timelines, and unanticipated property issues.
- Property Issues
Settlement delays might be caused by the discovery of undisclosed defects or damages that are found during the final inspection, leading to disputes over the property’s state.
Disputes can also arise over the interpretation of the contractual terms regarding the property’s condition, leading to negotiations regarding the way these oversights might be compensated or remedied.
- Post-Inspection Claims
Sometimes, issues are found with the property after an inspection, and a claim is made against the vendor, thereby leading to a delayed settlement.
Disputes over identified problems occur frequently, and it needs to be determined whether these problems existed before or after the contract was signed. There may be significant challenges in attempting to quantify the extent of the damages or required repairs, and an array of legal complexities need to be navigated surrounding how these post-inspection claims should be resolved.
- Missing Insurance
When a purchaser hasn’t arranged the necessary building and content insurance as required by their bank, settlement delays can occur. Usually, this is simply due to a lack of awareness or understanding of the insurance requirements.
However, it can also be related to difficulties in obtaining the necessary insurance coverage for that property. There may also be delays in processing insurance applications or obtaining the necessary documentation.
- Unsigned Loan Documents
When loan documents remain unsigned, the settlement cannot progress. This is generally a case of simple oversight or misunderstanding regarding how important the signing of all required documents really is.
Delays could also potentially be the result of logistical challenges related to coordinating document signings if parties are far removed from one another.
In some cases, there may be legal or financial concerns that prompt hesitation in signing the loan documents, and these concerns need to be resolved before the settlement can go forward.
- ID Verification Issues
While ID verification issues can happen with the vendor, they can similarly happen with the purchaser, causing delays in stamp duty processing and settlement signing.
To resolve this, the purchaser needs to ensure that the correct documentation is provided as proof of identification and that any changes in personal circumstances or legal status affecting ID verification are disclosed and resolved as soon as possible.
If you are looking for a conveyancing service provider who can help ensure smooth property transactions in Sydney, contact the experts at Flash Conveyancing to get a complimentary consultation.
