Rising Tide Blog

Buying a property? MUST READ

Posted by Sam Gawenda

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I have been assisting people with purchasing property for over 13 years, and without doubt, it is an emotional roller coaster for all involved.  I have witnessed first-hand the rapidly rising stress levels of purchasers as a settlement date approaches when the bank is still not ready to settle.

That’s why, at Rising Tide, our number one priority is to ensure our clients settle on the agreed date. That said, occasionally this does not occur (since keeping records, only 6% of our purchase settlements have been delayed), and there can be numerous reasons as to why.   

What happens if I miss settlement?

OK, let’s start with the doomsday/worst-case scenario.  Contracts can differ, but in general, if you miss the settlement date AND the vendor issues a default/recission notice, you have up to two weeks after the service of the notice to settle.  Beyond this, the contract may terminate, and your deposit may be forfeited to the vendor who may also be able to sue for damages.  Thankfully, in my 13+ years’ experience, I have never had a client issued a default/recission notice let alone have a contract terminated.

Of the 6% of missed settlements, over 90% are late by 1 – 3 days.  In this case, the vendor can charge a penalty interest for every overdue day (approximately around $200 per day for a $600,000 purchase).  If it is looking like your settlement may be late, our team will communicate with your conveyancer leading up to the date and would always request a penalty-free extension. Like many things in life, we have found that being proactive and upfront with all parties often leads to better outcomes.

How can I avoid missing settlement? 

Think of the final seconds of basketball game when someone needs to make the last free throw to win the game and misses.  

Is it the player’s fault for missing the final shot, or were there countless factors that led to the outcome during the game?  

I would go with the latter as missed settlements are often the same.  People tend to focus on issues/delays that pop up in the final days before settlement when many other factors slow down the entire process.  Keeping that in mind, here are some things that will help you meet your settlement date and ensure the process is a smooth one:

  • Return all requested information/documentation to your bank/broker as a matter of urgency (even when there isn’t time pressure)
  • When completing and signing paperwork, follow instructions closely.  If you are unsure, reach out for help – this really is a case of when near enough is not good enough.
  • Don’t leave information out and always be transparent with your bank/broker as it will come back to bite you later
  • Applications including guarantors are more complex, take longer, and have more room for error.  Ensure you and the guarantor(s) are on the ball throughout the entire process
  • Ensure you inform your bank/broker straight away if anything changes regarding your situation 
  • Ensure your signatures are consistent across all paperwork
  • Be available. Don’t go away for extended periods where you may be uncontactable or not have access to amenities.
  • Get the property insured and send your bank/broker the Certificate of Currency (insurance policy), noting the lender details
  • If you are contributing cash on settlement day, ensure you have it sitting in the correct account at least three business days prior to settlement
  • If you are selling a property at the same time as purchasing, ensure you have submitted a discharge form for your existing lending at least four weeks before the settlement

PRO TIP:   Do not book removalists or tradies for the actual day of settlement as this can lead to additional stress. Instead, allow for a few days of unforeseen delays. For example, if you want to move in on a Friday, set the settlement date on the contract as Wednesday that week. While this won’t help you avoid missing settlement, it will reduce stress and heartache!