All home buyers hope for smooth sailing when they purchase a property, but not everyone can be so lucky. While many likely breathe a sigh of relief when they find their dream home or buyer, provide or receive a successful offer, and sign the sale contract. However, the transaction isn’t done until the fat lady sings – that is, settlement is complete and ownership is officially transferred. 

Unfortunately, delays can occur – and they can be costly. Whether it’s a paperwork mishap, financial issue, or a problem with the property, a delayed settlement can create headaches for everyone involved.

Let’s delved further into what it means for settlement to be delayed, the rights you hold if it happens to you, and what penalties you might face if you’re responsible for delays.

What does it mean for settlement to be delayed?

Settlement is the final step in a property transaction. The amount of time between an offer being accepted and settlement occurring is generally agreed upon when seller accepts the buyer’s offer and is normally between 30 and 90 days.

On settlement day, representative of both the buyer and seller will come together to ensure the transfer of legal ownership over the property. This involves:

Settlement day will see the legal representatives of both parties come together to transfer the title, hand over the promised funds, and tick off any other lingering formalities associated with the sale.

With so many moving parts – and multiple parties involved – it’s not surprising that delays happen.

While a minor delay might seem harmless, the impacts can be significant.

  • For sellers: Settlement delays may mean continuing to pay rates, insurance, and mortgage repayments on a property they no longer plan to own. Sellers may also be relying on the promised funds for their next property purchase or other financial plans.

  • For buyers: Delays can leave buyers paying rent longer than expected, losing deposits on removalists or storage, or even facing temporary homelessness if they’ve already ended their lease.

Common reasons for settlement to be delayed

Settlement delays can stem from a variety of factors, including:

  1. Financial issues

    • Home loan applications being denied or not being finalised in time (this is why a subject to finance clause is so important)

    • A late provision of funds by the lender

    • Issues with the buyer’s financial situation or documents

  2. Documentation errors or delays

    • Incorrect or missing paperwork, such as legal forms or contracts

    • Title issues that need to be resolved before settlement can occur

  3. Property-related problems

  4. Delays caused by third parties

    • Conveyancers, lenders, or real estate agents running behind schedule

    • Unexpected legal complications

  5. The death of either party

    • If the seller passes away before settlement occurs, the property’s legal status may become complicated and require estate management or probate processes that can delay the sale

    • If the buyer passes away before settlement, the transaction may or may not continue as expected and, if it continues to settlement, the property will make up part of the buyer’s estate

Suspect your settlement might be delayed? Here’s what to do

If you think you might miss your settlement date, it’s time to act fast and contact your team to explore solutions. Start by reaching out to your conveyancer or solicitor – they might have already flagged potential issues or can help you navigate the process.

Once you’ve identified the cause of the delay, consider informing the other party involved. In many cases, buyers and sellers can agree to extend the settlement period.

Since conveyancing laws vary by state, it’s essential to consult your legal representative for individual advice.

How to address delays on your end if you’re the buyer

When purchasing a property, your conveyancer or solicitor is likely your strongest advocate throughout the transaction. If delays stem from financing issues, contact your home loan lender as soon as possible to clear up any confusion and explore next steps.

Be transparent with your legal team and lender to keep things moving – they may be able to secure an extension or provide alternative solutions.

How to address delays on your end if you’re the seller

If you’re selling a property and facing delays due to issues on your end, time is critical. Connect with your conveyancer or solicitor and real estate agent to identify the source of the delay and create an action plan.

Possible next steps might include:

  • Booking tradespeople to fix last-minute property issues discovered during inspections

  • Submitting missing documents or clarifying details with the buyer’s representatives

  • Negotiating timelines with the buyer’s team

What are your rights when settlement is delayed?

If you’re facing settlement delays caused by the other party in your property transaction, it’s important to know your rights and responsibilities. Further, if you, your representatives, or responsibilities are behind settlement delays, you should be aware of the liabilities and penalties you could face.

Many states allow a grace period before either party is penalised for missing the settlement date, and quite a few allow one or both parties to issue a demand for the sale to be settled with a set window. Typically, if the buyer is responsible for the settlement’s failure, the seller gets to keep their deposit.

New South Wales

Home buyers who find their sellers aren’t in a position to settle on the agreed date have limited rights in New South Wales. Though, after a certain point, it’s likely they can retrieve their deposit.

On the other hand, if the buyer is the reason for the settlement delay, the consequences can be significant. The vendor may have the right to charge penalty interest for each day the settlement is deferred. The seller can also issue a notice to complete and, if the transaction fails to settle within the given time period, they might have the right to tear up the contract and keep the buyer's deposit.

Victoria

In Victoria, buyers can demand their deposit back if settlement is delayed by more than 10 days. They could otherwise ask for a license agreement, which could allow access to the property despite the delay.

Sellers, on the other hand, can charge penalty interest – how much is likely detailed in the contract of sale. 

Queensland

Buyers and sellers in Queensland can choose to accept or refuse requests to postpone the settlement to a later date.

As a buyer, you can sue the seller for damages associated with any delays or potentially demand penalty interest.

If the buyer misses the settlement date, the seller has the same rights, and can keep the buyer’s deposit if they fail to settle.

South Australia

Buyers and sellers in South Australia have no obligation to accept the request of the other party to delay the settlement.

Inconvenienced buyers can demand sellers comply and complete the settlement within a specified time, usually at least two weeks. If your vendor was not able to comply, you could ask they pay penalty interest.

The same goes if the buyer is the party holding up the settlement and, if the contract is torn up, the seller can keep the deposit.

Western Australia

Buyers and sellers of Western Australian property can demand the party responsible for settlement delays pay a rate of interest for each day they fail to settle.

They can also issue a notice allowing them to back out of the contract if settlement doesn't occur within a certain time frame and, if the buyer is at fault, the seller can typically keep their deposit.

Tasmania

When settlement is delayed in the Apple Isle, the aggrieved party can issue a notice to complete. An additional 14-day period is usually given for the party causing delays.

Otherwise, the party causing the delay may be forced to pay for losses incurred due to the deferment.

Australian Capital Territory

When either party to a property sale in the ACT misses the completion date, they have a week to get things back on track.

Typically, if the buyer is the cause of delays, they can be charged penalty interest after those seven days, while a sale contract will normally protect the seller in the event they’re the cause of delays.

 Northern Territory

If property settlement is delayed in the NT, an extension can be granted.

If settlement still can’t occur due to the vendor, the buyer can demand they get their deposit back, plus interest.

If the buyer is at fault, they might be charged penalty interest.

Article originally written by Gerv Tacadena in 2022. Last updated by Brooke Cooper in 2024.

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