The settlement date is the long-awaited finale when buying or selling a property; it’s the day you’ll finally hand over keys and become the owner of your new home. While this can be a very exciting and monumental time, sometimes things don’t go as planned, and proceedings need to be delayed.
In this case, the buyer or seller can request to change the settlement date, even after the contracts have been signed, but there are caveats to be aware of.
What happens on settlement day?
Settlement day will involve your money lender and conveyancer/solicitor, as well as the other party’s representatives, checking that all the necessary documents have been signed and then completing the money transfer from the buyer to the seller.
Once all forms are signed and the money has gone through, the buyer will officially be the registered new owner of the property and the seller’s representative will hand over the keys. The buyer is then free to move in whenever they like.
You don’t need to be physically present for settlement because it is usually done online through the PEXA platform. Your conveyancer will be able to advise you how and when to access the platform.
How to choose the right settlement day?
The settlement date must be negotiated and agreed upon by both the buyer and seller, and then signed off in the contract, so you’ll need to choose a day which is suitable for both of you.
To make negotiation easier and minimise the chance of delays, buyers will need to make sure they will have enough money in their bank account to cover the deposit and other fees (legal, conveyancing, stamp duty, etc). Buyers should also consider the time and costs that could come from selling a current property.
Following settlement, the purchasers conveyancer will send a Notice of Acquisition to Council and Water to notify them that a change in ownership has occured
How to change a settlement day
If settlement has been agreed on, but you now need it moved – you will need to reach out to the conveyancers and the other party as soon as possible to request this change. We recommend that you check with your bank to ensure they are ready for settlement before making a request to bring forward a settlement date. Your conveyancer can send a request to the other party and negotiate on your behalf, as well as check the contract for any conditions that could affect your request.
What can cause settlement delays?
- Time needed to vacate current tenants
- Money lending delays
- Vendor’s bank delays
- Incorrect or late documents
To request a change in your settlement date, please contact your conveyancer to discuss your options and trying to reduce your risk of being hit with a financial penalty.
What if one party doesn’t agree to changing the settlement date?
Even if you request to change the day of settlement – even for a genuine, required reason – the other party is not obliged to agree to it. You can of course put the reason to the other party, but it is their prerogative to stick to the original required date.
If they do reject your request, the original settlement date will remain in your contract.
Failure to comply with the original date will be considered as delaying proceedings and there may be cost implications, legal action.
Equally, if the other party has requested to change the settlement date and you refuse, you may be entitled to take legal action if the settlement is delayed.
Consult your conveyancer before making any rash decisions so they can advise you on the best course of action. They will also flag any conditions within your contract that need to be met and discuss the risk of changing a settlement date.
Can a contract be cancelled after it has been signed?
Yes. You can cancel your contract, provided it is done during the cooling-off period, and there will be a fee involved. The cooling-off period normally lasts for 3 days (depending on your state) after the buyer has signed the contract (the seller doesn’t need to have signed yet).
Let’s say a buyer in Victoria cancels their contract within the 3-day cooling-off period, they will need to pay either $100 or 0.2% of the purchase price, whichever is higher.
How to avoid delaying settlement day
While it is possible to change a settlement date, it can cause a lot of stress and uncertainty between both parties, so it is best to avoid it where possible. To help your settlement process go as smoothly as possible, you should:
- Make the most of the final property inspection
The final inspection is your last chance to flag any problems with the property, whether it be a new issue or something the seller agreed to resolve in the contract but has failed to do so.
- Organise moving out
Sellers should clear their belongings from the property and vacate any tenants in good time so that the buyer can move in whenever they like after settlement day.
- Get funds in order
The buyer needs to have enough money in their bank to cover the transfer of funds on settlement day, and council rates which is transferred to the buyer once they become the property’s registered owner.
- Seek guidance from your conveyancer
A conveyancer will guide you through the settlement process, including preparing for the property sale, checking clauses in your contract, and ensuring everything is going as smoothly as it should.
For expert advice and support, book a consultation with the Entry Conveyancing team today and we will respond to you as soon as possible. Contact us by filling in the form on this page or by calling 1800 518 187.
