Can you change the settlement date of a property transaction?

Imagine you’re buying or selling a property and everything’s going to plan ahead of settlement, until there’s a hitch. It’s enough to send buyers and sellers alike into panic.

But take heart, it is possible to extend the settlement date on a signed contract and still have the sale go through.

In fact, extending the settlement date on a contract is probably more common than you think. Particularly as property sales don’t just involve buyers and sellers, but usually banks, real estate agents, and conveyancers or solicitors too. There are a lot of moving parts to real estate transactions and sometimes things don’t always fall exactly into place.

In most cases, it’s possible to move the settlement date as long as all parties agree, but let’s start at the beginning.

What issues might cause a settlement date to change?

Here are some of the most common issues that can hold up a property sale in Australia:

Lender issues

Lenders can be a major cause of settlement delays. A buyer’s lender may take longer than expected to approve their home loan, particularly if it’s got a backlog of applications to consider or it’s a busy time in the property market.

If you’re a buyer, the best thing you can do to overcome any such delays is to make sure you complete and return any paperwork needed by your lender, along with any supporting documentation, as soon as you can.

Delays can often be caused by incomplete or inaccurate paperwork, so it’s important to double check your documents before submitting them. While it sounds obvious, also triple-check to make sure any names and their spelling are correct, property details match up with official records, and requested supporting documents have been supplied.

This will help the lender get on with its approval process in good time before settlement.

Property issues

Sometimes issues arise with the property that can delay settlement.

Buyers might identify an issue at their final inspection before settlement that a seller is liable to repair. It may be a problem that's arisen after they signed the contract or something that’s only become apparent later.

If you’re buying a property, your solicitor or conveyancer will be able to tell you if you can ask for the issue to be attended to and if settlement needs to be delayed for the seller to complete any necessary repairs.

Whether that’s possible will depend on the terms of your contract. Sometimes, the issues identified won’t necessarily give you the right to delay settlement. It’s best to seek legal advice if you’re concerned.

Delays caused by other sales or settlements

Another relatively common cause for extending a property settlement is when a contract depends on the sale of another property, and that transaction hits roadblocks.

For example, a buyer may need to sell their existing property to fund the purchase of a new one. If the sale contract falls through or there’s a delay in one settlement, it can cause a ripple effect, delaying other related settlements.

There’s typically little that a seller can do in such circumstances. It’s wise to speak to your solicitor or conveyancer if you find yourself in this situation. There may be steps you can take to give yourself some breathing room should something not go to plan.

Other issues

Unfortunately, there are all manner of things that can hold up a sale. Other causes of delays include:

• Third party issues, such as a caveat over the property not being removed (a caveat is a type of legal restriction over the property, usually lodged as a result of previous disputes)

• A seller’s mortgage not being discharged in time

• A seller being unable to vacate the property in time

How do you change the settlement date on a property sale?

Now that we’ve covered the many things that can go wrong with property settlements, let’s see what can be done if a transaction has hit a snag.

Property contracts are governed by the laws of Australian states and territories. In all states and territories, contracts become legally binding when they're signed by both parties.

Yet, even after that, it’s still possible for one party to change the settlement date, but only if the other party agrees to do so.

Bear in mind, neither party is under any obligation to agree to a settlement date change. But, if there’s an amicable agreement, the date can generally be changed without penalty.

It’s best to document any agreed-upon changes in writing to ensure there’s a legal record of the change.

Here’s a rundown of what details to include in any variation on an original contract:

• Exactly what the changes are

• That the other party has agreed to the changes

• Any consequences of making the changes

• Any costs associated with making the changes

• How both parties have agreed to resolve these costs

It’s worth noting the party that requests the date change or variation is typically the one that will pick up the tab for any associated costs.

Again, a conveyancer or solicitor is in the best position to provide advice on preparing and negotiating contract variations.

What if the other party doesn’t agree to change a settlement date?

If there isn’t an agreement to a change the settlement date on a property transaction and one party can’t meet the original date, that party could face penalties and even risk the contract being terminated.

Again, it’s best to seek legal advice if you find yourself in any such situation. Sometimes your legal representative may be able to negotiate a change with the other party’s legal representative to keep the property sale on track on your behalf.

In some cases, it may involve providing the other party with compensation or paying a penalty.

Extending settlement dates in Queensland

It’s a little easier to change the settlement date of a property transaction in Queensland. In January 2022, the state introduced an amendment to standard property contracts to make extending the settlement date simpler.

REIQ contracts allow any party to extend the settlement date by up to five business days after the original settlement date. Each party has until no later than 4pm on the day of settlement to do so.

In effect, this gives both parties the right to extend settlement without needing to provide a reason.

However, as a matter of courtesy, it’s best to advise all parties involved – including lenders, real estate agents, and conveyancers or solicitors – as soon as it’s apparent a settlement extension will be required.

As well as potentially affecting the final sale amount, this also allows both parties to amend any plans they may have made. After all, they may need to postpone removalists, locksmiths, insurance policy dates, and the likes.

How you can best prepare for settlement day

When it comes to property settlement, certain factors may be beyond your control, but following this guide can help streamline the process.

For buyers

Consult your conveyancer or solicitor to ensure all property details match the official records, so any discrepancies with what you're buying can be resolved early.

Conduct your final inspection before settlement day to make sure everything is in order. Check that any items listed in the contract are still in place, such as fixtures and fittings, and any items the seller agreed to remove are gone.

Arrange building and contents insurance to begin the day you’re due to take possession of the property (unless you become responsible for insurances prior). These can be changed if there’s any change in the settlement date.

It’s best not to organise for removalists to arrive on your new doorstep on settlement day. It can cause a logistical nightmare if there’s a delay.

Property settlements rarely happen first thing in the morning and there may be little time left in the day to move in after you officially take possession. It’s best to arrange other accommodation for settlement night to remove that stress.

For sellers

Keep in touch with your agent and conveyancer or solicitor to ensure the sale is proceeding as expected. Double check you've completed all the necessary documentation needed for the sale to go through.

Expect the buyer will want to do a final inspection of the property a day or two before the settlement date. As such, you should ensure the home looks as good as it did – or better – than when the buyer last saw it.

Be prepared to deal with any issues that may arise during the final inspection, such as damage that became apparent after you or your tenants removed furniture. Also, make sure you've completed any repairs you agreed to in the contract.

It’s wise to have your furniture and other belongings removed from the house before settlement day. You don’t want to be moving out when the new owners are feasibly able to move in.

If you plan to move to another property that settles on the same day, consider finding accommodation elsewhere for that night, just in case either settlement is held up.

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