A delay in settlement can occur when either a Vendor or Purchaser is not ready to settle on the nominated day. This can be stressful and may cause you to incur expensive penalty interest if you are responsible for the delay.
Effective communication between everyone and your Conveyancer can be invaluable at this time and may alleviate some of the stress.
Most commonly, especially during the current climate, banks can be responsible for the delay due to processing times for their loan documentation and verification processes. Quite often receiving documentation late from the client will also contribute to delays.
What can be done to avoid delays, I hear you say?
Well, usually a Purchaser needs to take out a mortgage to buy a property and the Vendor needs to discharge their previous mortgage against the property. Both banks must be ready for settlement to occur and if they have not had sufficient time to process their documentation this can be the most common cause of a delayed settlement. Some reasons that the bank may not be ready in time include:
- Vital documents not being returned in time,
- Partial discharges and multiple properties being dealt with necessitating a valuation to be completed,
- Sometimes administration errors are made by the banks themselves,
- And sometimes, simply there is not enough time to meet the contracted date.
Therefore, to greatly reduce the risk of bank complications delaying your settlement you need to ensure that you action, sign and return bank and conveyancing documentation as soon as practically possible once you have executed a contract.
Timing of Property Settlements
In South Australia, property settlements are generally set for only 30 days after the contract has been signed, and due to the current property boom, this may not be long enough.
Purchaser’s may also look at applying for pre-approval for finance if you know you are in the market for a house. Or, if you have a repaid loan, contacting your bank to get them to discharge the loan prior to settlement, or even prior to contracting your property, therefore producing a clear title for settlement.
If you have a loan to discharge, ensuring that you have completed a discharge authority correctly, including your Conveyancers contact details, and sending to your bank at least 10 business days prior to the contracted settlement date. However, due to the current property boom, banks are experiencing longer turnaround times, so we suggest getting your discharge authority to the bank as soon as practically possible. Ensure that you talk to your Conveyancer as soon as a contract has been signed so this can be assessed and dealt with promptly.
What happens if settlement is delayed?
Sometimes even with all the best endeavours, delays in settlement just cannot be avoided. This can cause issues with removalists and people having to re-schedule, and also penalties being applied. It is best to communicate with your Conveyancer to work out the best outcome that suits all parties. In some cases a licence to occupy may be granted to allow people to move, but each situation is unique.
Having a great Conveyancer who keeps you up to date will make all the difference. They will know your rights and remedies under the contract and can negotiate the best way forward for you. If you have any questions in relation to this topic, please contact the friendly and professional team at Strathalbyn Conveyancing.