One of the most important dates to be written into a property sales contract is the anticipated day the sellers must vacate the premises and allow you to move in or take possession as an owner – otherwise known as settlement day.

However, the process can sometimes throw obstacles in your way, causing a delay to occur, despite both parties having already signed off on the agreed date that the keys will be handed over.

From the seller waiting for the bank to discharge their mortgage, and problems with paperwork, to the buyer discovering a problem during final inspection of the property, and unforeseen life hurdles that get in the way, the reasons for why settlement delays can occur are wide-ranging and often stress-inducing.

It is especially stressful if you are an investor who has lined up a tenant to move into the property, as the delay has the potential to impact the new renters.

Fortunately, there are a few legal rights the buyer has at their disposal if the vendor delays settlement day – keeping in mind of course that some problems can’t be helped.

A buyer should show some level of understanding, depending on what has caused the delay; however, if a delayed settlement truly doesn’t suit you, there is recourse available.

What are your settlement rights as a buyer?

Your rights as a buyer depend on the state you’re purchasing in, but remember that settlement laws can change, and it’s always best to team up with a professional conveyancer or solicitor throughout the buying process.

Queensland

According to Matthew Armstrong, Senior Associate at Sparke Helmore Lawyers, “In Queensland without amendments by way of special conditions to the Queensland REIQ contract of sale the ability to charge default or penalty interest only applies to late payments made by the Buyer not the other way round.

You can of course negotiate any terms as part of settlement extensions but a buyer charging default or penalty interest would be unusual because the seller actually does not owe the buyer any consideration, so default or penalty interest on nothing is nothing.

In fact the buyers contractual rights in Queensland are generally limited to:

1. suing for damages, suing for specific performance (forcing the seller to settle) or a combination of both if the seller fails to settle on the due date and the buyer affirms the contract; or

2. recovering the deposit and suing for damages if the seller fails to settle on the due date and the buyer terminates the contract.

Both options are usually not palatable or cost effective unless the buyer genuinely wants out, so buyers generally just agree to the extension (sometimes with early possession)”.

Western Australia

In WA, buyers need to allow settlement to be delayed for three working days before they’re able to charge the vendor penalty interest.

New South Wales

On the other hand, in NSW buyers have the right to issue the seller with a Notice to Complete, which gives them an extended time, usually about two weeks, to settle. Thereafter, the buyer can terminate the contract and retrieve their deposit.

Victoria

Unfortunately, a buyer doesn’t have as many legal rights in Victoria. They have no right to enforce payment of penalty interest by the seller, and only after a 10-day delay is the buyer able to terminate the contract.

Tasmania

The rules protecting buyers in Tasmania mirror those in NSW, in that they can issue a Notice to Complete extending the settlement to about 14 days. If the seller does not comply, the buyer has the right to claim for losses suffered as a result of the delay.

South Australia

In SA, the buyer doesn’t have a legal obligation to approve a delayed settlement by the seller. Changes can only happen if both parties are able to reach agreement as to the new date.

The buyer can, by giving written notice, ask the seller to rectify the delay within three working days, and their failure to do so grants the buyer the right to impose the penalty interest specified in the sales contract.

Northern Territory

Northern Territory buyers are able to send written notice to the seller, giving them 10 days to settle, and if the seller doesn’t follow this instruction, they have to repay all financial assets to the buyer, including interest as per the contract.

Considering how settlement laws vary between each of the states, it’s advised that you should team up with a conveyancer or solicitor who operates in your specific state. That way you can gain the most up-to-date advice on buyers’ rights in your state, and also ensure that the settlement process is as smooth as possible.

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This article via Your Investment property does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.