Delayed settlement guide

delayed settlementWhat happens if you’re buying or selling a house and settlement is delayed? Find out here in this Australia-wide guide.

When you buy or sell property, in the best-case scenario everything goes to plan and settlement occurs on the agreed date. Unfortunately, that doesn’t always occur. From financial problems to simply changing their minds, there are several factors that can prompt the buyer or seller to delay settlement.

But if this happens to you, what are your rights? Read on to find out.

Why might settlement be delayed?

After finding the perfect home and having your offer accepted, you may feel relief that the house hunting is finally over and start feeling excitement about moving into your new home. But just because you’ve signed a contract doesn’t mean that it’s a done deal. There are still plenty of problems that could arise before you actually take possession of the house. In fact, one in five property settlements in Australia is delayed by a median period of seven days, according to the May 2015 Economic Impact of E-Conveyancing Report.

There are several frustrating and potentially costly issues that could cause settlement to be delayed.

Bank problems

Issues with a bank could cause either the buyer or the seller to delay settlement. While the homebuyer may be relying on their bank to approve their home loan application, the seller may need to discharge their previous mortgage before the property can be transferred to a new owner. This means settlement can’t occur until the bank has done its bit, so if Katie Richards Virtual Legaleither the buyer or the seller is late returning important documents or if there are any errors in the paperwork, delays can result.

“Often it is the bank that is not ready to release a mortgage because the seller may have put the release authority in late, given many sellers don’t put it in until the property goes unconditional and sometimes this only leaves one to two weeks before settlement. Some banks can turn it around in a week but others take up to six weeks to prepare for settlement,” explains Katie Richards, a property lawyer for the online law firm Virtual Legal.

Laura Vickers Nest LegalLaura Vickers, principal from Nest Legal in Northcote, Victoria, adds that “the risk of bank error is exacerbated if the purchaser or vendor themselves have been tardy in signing documents or picking up errors by the bank. Or if they use a different signature or name on the bank documents as they do on the legal documents”.

Final inspection issues

Sometimes, the buyer might discover an issue during their final inspection of the property before settlement. For example, the buyer might discover a faulty garage door hasn’t been fixed. This problem (and its rectification) could be essential to the sale of the property going through.

“The buyer may have put other requirements on the seller, such as fixing items on the house in exchange for going unconditional on building and pest, so the seller may need more time to affect the repairs,” Richards says.

Difficulty selling another property

Another common problem arises when one contract is dependent on the sale of another property. For example, in order to fund the purchase of one property, you may first have to successfully sell your current home.

Late documentation

During the conveyancing process, a range of important documents, including the Transfer of Land, must be submitted to the relevant government bodies. If either the buyer or seller is tardy at returning completed paperwork to their conveyancer, this can cause delays.

Seller delays

“Sellers can also delay settlement by not having moved out of the house, or not having a tenant moved out of the house where vacant possession is to be provided, and in some of these cases the relevant state authority needs to be involved to evict the tenant,” Richards says.

Other issues

Vickers mentions a few other less common issues that can sometimes cause a delayed settlement:

  • Third-party issues (eg, a caveator not removing a caveat)
  • The vendor not vacating the property in time or not being able to locate the certificate of title
  • Solicitor/conveyancer error (eg, one party’s settlement agent being held up in traffic and not making it to the settlement in time).

Your rights when settlement is delayed

Conveyancing laws vary from state to state, so it’s essential that you obtain expert advice from a conveyancer in your local jurisdiction.


State Icon QLDIn Queensland, if you’re buying a house and the vendor wants to delay settlement, Richards says you don’t have to agree. “Depending on the terms of the contract you’ve signed, you could wait until close of business on settlement date and send notification to the seller noting you are ‘ready, willing and able’ to settle and if they don’t settle by that required time, you can terminate and sue for damages, or possibly obtain specific performance where a court would force the seller to have to settle. Alternatively, you may be able to allow the extension but charge default interest for the extra days so that you are compensated,” she explains.

However, when the roles are reversed and the buyer wants to delay settlement, the vendor can also refuse to agree. Depending on the terms of the contract, the vendor could wait until close of business on the settlement date and send notification to the buyer that they are “ready, willing and able” to settle. If they don’t settle by that required time, the vendor can terminate the contract, keep their deposit and sue for damages, or possibly obtain specific performance where a court would force the buyer to have to settle. Another option is to allow the extension but charge default interest for the extra days so that you are compensated.

Western AustraliaState Icon WA

The situation is a little different in WA, where there is a leniency of three business days but then penalty interest applies. Once again, the exact terms and conditions depend on the actual contract you sign.

New South Wales

State Icon NSW“In NSW, in the event that the purchaser is not in a position to settle on the settlement date, generally the vendor can charge penalty interest for each day that settlement is delayed and also issue what is commonly known as a Notice to Complete, giving the purchaser an additional period of time (usually 14 days) to settle, thereby making time essential,” Richards explains.

In the event that the purchaser is not able to settle by that date, the vendor may be able to terminate the contract and (among other remedies) keep the purchaser’s deposit.

“In the event that the vendor is not in a position to settle, the rights of the purchaser are fairly limited in that they can issue a Notice to Complete, giving the vendor an additional period of time (usually 14 days) to settle, failing which the purchaser may terminate the contract and (among other remedies) retrieve their deposit. Penalty interest is not usually payable by the vendor for delay,” Richards says.


State Icon VICIn Victoria, a purchaser doesn’t have a right to receive penalty interest if a vendor delays settlement. However, Vickers says that a vendor who has caused a purchaser this inconvenience will generally be open to coming up with a solution that makes things easier for the purchaser if possible, such as a licence agreement for early occupation.

But if you’re selling a property and the buyer wants to delay, you have a right to charge penalty interest. “The exact amount will be specified in the contract and is calculated on a day-by-day basis. The standard rate is 2% higher than the penalty rate (which will be 10% p.a. from 1 February 2017) but the vendor may have drafted the contract to make this higher,” Vickers says.
A vendor doesn’t have to charge penalty interest. Often if a purchaser gives a vendor enough notice that they can’t settle on the contracted date and there is only going to be a short delay, the vendor will elect not to charge, particularly if they are not paying interest themselves. “It depends how nice they are feeling,” Vickers says.


State Icon TASIf the other party is not in a position to settle on the settlement date, you can issue a Notice to Complete. This gives the other party an additional period of at least 14 days to settle.

If a Notice to Complete is not met and the innocent party decides to call off the deal, they can claim their losses from the guilty party. For example, a buyer who fails to meet a Notice to Complete will automatically lose their deposit and may also have to answer to the vendor to cover other losses.

South Australia

State Icon SAChanges to the settlement date after a contract has been signed can only take place when both sides agree to the changes, but there is no obligation for the other party to agree to delay settlement.

If the buyer fails to settle on the settlement date or during the next three business days, the vendor can issue a Notice of Completion. This gives the buyer a deadline of a minimum of 14 days to complete settlement. The buyer will also be liable for penalty interest on the total purchase price.

If the vendor breaches the contract of sale, SA buyers can give written notice to remedy the default within three business days. If the vendor fails to do so, the buyer has the right to postpone settlement until the default is remedied and force the vendor to pay penalty interest at the specified default rate.

Northern Territory

State Icon NTNorthern Territory buyers and sellers can issue a written default notice if the other party is not ready to settle, giving them at least 10 working days to remedy the default.

If the buyer delays settlement, they could be subject to penalty interest at the rate specified in the contract of sale. If the seller defaults on the contract, they’re required to repay all money paid by the buyer plus interest at the rate specified in the contract.

Of course, the information above is just a guide, so it’s essential to seek expert legal advice tailored to your state or territory and your particular contract of sale.

How to reduce the risk of delayed settlement

The following are some of the steps you can take to minimise the chances of settlement being delayed for any reason:

  • Be organised. “Sign and return documents as soon as you are asked to by your solicitor and your broker. Return them by express post or personally,” Vickers says. “The bank certification process can take several weeks in peak periods and your solicitor needs to get documents to the other side to give them time to sign them before settlement. If you want to nominate an additional or substitute purchaser, decide this early.”
  • Choose the right team of professionals. “You want your solicitor/conveyancer, buyer’s advocate and mortgage broker to be contactable and promptly answering any questions you have,” Vickers says.
  • Communicate. Keep your broker, solicitor and, if necessary, your buyer’s advocate or the real estate agent in the loop about any developments that affect them. Ask questions early in the process if there’s anything you’re unsure of. “There are no stupid questions – most conveyancing solicitors operate on a fixed-fee basis so you should ask about anything you are not sure about without fearing an increased bill at the end,” Vickers says.
  • Pay attention to detail. Double-check all documents for discrepancies. Do the figures in the bank documents match what you discussed with your broker? Do the names on the transfer and stamp duty documents match those on the contract and do they match those on your bank documents? Raise any discrepancies with the relevant people as early as possible so the issues can be fixed in time, Vickers advises.
  • Consider electronic conveyancing. “Electronic settlement through PEXA reduces issues with bank and human error; however, this needs to be organised well ahead of the contracted settlement date,” Vickers says.
  • Play nice. Richards says this is the most important tip to remember during any property transaction. “If the buyer asks for an extension on finance for two days for a good reason and the seller says no, causing the buyer to have to go unconditional without finance approval in hand, then when it comes time to settle, if the seller needs an extension to remove a tenant or something on title, then the buyer is less likely to want to be helpful and may refuse that extension then too,” she says. Being prepared to cut the other party some slack whenever they have a good reason for running a little late can go a long way to ensuring a smooth and on-time settlement.

Images: Shutterstock

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.

8 Responses

  1. Default Gravatar
    SueJanuary 26, 2018

    I asked the real estate agent 6 weeks for settlement, I have now been told will be next Friday (4 weeks) we have had to go to Sydney due to a death in the family in this time frame. Settlement agent cc’ed me in an email today that was sent to Real estate agent asking where all the paperwork is (1 week b4 settlement). Do I have any rights eg date of Settlement, I’m in WA

    • Staff
      JonathanFebruary 21, 2018Staff

      Hi Sue, thanks for your inquiry.

      Is it possible to communicate to the real estate agent asking for an extension?



  2. Default Gravatar
    GeorgiaDecember 12, 2017

    Settlement on my property has been delayed because the buyer has not returned from overseas. What are my rights other than charging a penalty?

    • Staff
      MayDecember 13, 2017Staff

      Hi Georgia,

      Thank you for your inquiry.

      Well, your right as a seller would vary depending on the which state your property is located as the conveyancing law in every state differs. For example in QLD, aside from keeping the buyer’s deposit, you can also sue them for the damages caused. So depending on the contract you signed in and the conditions therein, you, as a seller have the right when a buyer delays the settlement. Best to seek an expert advice from a conveyancer in your local state on this matter.


  3. Default Gravatar
    KateNovember 6, 2017

    In QLD, can you get a bank loan application approved for a property that has not had title settlement?

    • Default Gravatar
      JonathanNovember 7, 2017

      Hi Kate,

      Thank you for your inquiry. Usually, you should already have a pre-approved for a mortgage at the time your purchase agreement was accepted.

      Property settlement is complex legal process. Ask your legal and financial representatives to deal with the seller or their representatives.

      Alternatively, you may get in touch with a mortgage broker for further advice.

      Hope this helps.


  4. Default Gravatar
    santoshAugust 2, 2017

    I have purchased a property recently. Settlement was due on 28th July but was actually settled on 1 August. I have defaulted for three days. Vendor has calculated interest @14 % on the balance owing for four days . Is this the corrrect calulation.

    • Staff
      JhezelynAugust 2, 2017Staff

      Hi Santosh,

      Thanks for your comment.

      The vendor is entitled to charge the purchaser interest for the number of days settlement is delayed. The exact amount will be specified in the contract and is calculated on a day-by-day basis.

      You may want to speak to a mortgage broker to help you recalculate the penalty interest.


Ask a question
Go to site