Settlement day is one of the most important stages of a property transaction.
For most buyers and sellers, the expectation is that settlement will happen on the agreed date and the transaction will be completed without any problems.
But what happens if settlement is delayed?
A delayed settlement can be stressful, particularly if you are buying and selling property at the same time, have removalists booked, are arranging finance or need to move into your new home.
The consequences of a delay depend on why settlement has been delayed, what the Contract of Sale says and which party is responsible.
This article explains some of the common reasons for delayed settlement in Victoria and what buyers and sellers should do if settlement cannot proceed as planned.
What Is Settlement?
Settlement is the stage where the buyer provides the balance of the purchase price and the seller provides the required documents and completes the transfer of the property.
Once settlement is completed, the buyer can generally take possession in accordance with the contract and the seller’s obligations are completed.
If settlement cannot proceed on the agreed date, the transaction may need to be rescheduled or other arrangements may need to be made.
What Can Cause Settlement to Be Delayed?
There are many possible reasons for a delayed settlement.
Common examples include:
- Finance not being ready
- A lender failing to provide funds on time
- Missing settlement documents
- Errors in transfer documents
- Problems with the title
- An issue identified during settlement preparation
- A previous transaction not settling
- A party not being ready to settle
- Outstanding adjustments or financial information
- Technical or electronic settlement issues
Some delays are minor and can be resolved quickly.
Others can have more serious consequences.
What Happens If the Buyer Is Not Ready to Settle?
If the buyer cannot settle on the agreed date, the seller may have rights under the Contract of Sale.
The consequences depend on the contract and the circumstances.
The buyer may potentially become liable for costs or interest associated with the delay.
In some circumstances, the seller may have additional contractual rights.
A buyer should therefore contact their conveyancer immediately if they know they will not be ready to settle.
What Happens If the Seller Is Not Ready?
The same principle applies if the seller is unable to complete the transaction.
The buyer may have rights under the Contract of Sale depending on the reason for the delay and the relevant contractual provisions.
For example, the seller may have an outstanding mortgage issue, missing documentation or another matter preventing settlement.
The parties should communicate promptly and try to resolve the issue as quickly as possible.
Can Settlement Be Rescheduled?
Yes, settlement can sometimes be rescheduled if the parties agree.
The new settlement date should be clearly documented and confirmed by the parties and their conveyancers or solicitors.
However, one party should not simply assume that settlement can be moved without consequences.
If the delay is not agreed, the original contractual settlement date may remain important.
What Is Default Interest?
Depending on the contract and the circumstances, a party who fails to settle on time may become liable for default interest.
Default interest is designed to compensate the other party for the financial impact of the delay.
The applicable rate and circumstances depend on the contract.
If settlement is delayed, your conveyancer can explain whether default interest may apply.
Who Pays the Costs of a Delayed Settlement?
The answer depends on why settlement was delayed and what the contract provides.
Potential costs may include:
- Default interest
- Additional bank or finance costs
- Rescheduling fees
- Storage costs
- Temporary accommodation
- Removalist cancellation or rescheduling fees
- Other expenses caused by the delay
Not every cost will necessarily be recoverable from the other party.
You should keep records of any expenses and speak with your conveyancer about your contractual position.
What If My Finance Is Delayed?
Finance problems are one of the common reasons a buyer may not be ready to settle.
For example, the lender may still be:
- Completing its approval process
- Finalising loan documents
- Preparing settlement funds
- Resolving a valuation issue
- Waiting for information
If your finance is not ready, contact your lender and conveyancer immediately.
Do not wait until settlement morning if you already know there is a problem.
What If I Am Selling and Buying at the Same Time?
This can make a settlement delay particularly stressful.
If your sale needs to settle before your purchase, a delay in the sale may prevent you from having the funds required for your purchase.
For example:
Sale delayed → sale proceeds unavailable → purchase settlement affected
If you are buying and selling at the same time, tell your conveyancer as early as possible.
You can also read our article about simultaneous settlement for more information about coordinating connected property transactions.
What If the Settlement Delay Is Caused by Another Transaction?
Sometimes a property transaction is part of a chain.
For example:
Seller A → Buyer B → Buyer C
If Seller A cannot settle, Buyer B may not receive the funds or title required to complete their transaction with Buyer C.
This can create a chain reaction.
Your conveyancer can communicate with the relevant parties and help determine the best way to manage the situation.
What Happens to the Keys?
If settlement has not occurred, the buyer generally should not assume they can take possession of the property.
The timing of possession and key release depends on the Contract of Sale and settlement arrangements.
If settlement is delayed, contact the selling agent and your conveyancer before making moving arrangements.
Can I Still Move In If Settlement Is Delayed?
Generally, you should not move into the property before settlement unless the parties have agreed to an appropriate arrangement.
If you have booked removalists or arranged temporary accommodation, a delayed settlement may affect your plans.
Do not assume that you can access the property simply because the original settlement date has arrived.
What If the Property Is Vacant?
Even if the property is vacant, the buyer should not assume they can take possession before settlement.
The contractual settlement and possession arrangements still need to be followed.
What If the Delay Is Only a Few Hours?
A short delay does not necessarily mean that the transaction has failed.
Settlement may sometimes be completed later on the same day if the parties, lenders and settlement platform can accommodate the delay.
However, this depends on the circumstances.
Your conveyancer can communicate with the other parties and keep you updated.
What If Settlement Cannot Happen That Day?
If settlement cannot occur on the scheduled date, the parties may need to agree on another settlement date.
The contractual consequences will depend on the circumstances.
If the delay is caused by one party’s failure to comply with the contract, there may be rights or costs associated with the delay.
What Should I Do If I Know Settlement Will Be Delayed?
Contact your conveyancer as soon as possible.
You should also contact your lender or mortgage broker if the issue relates to finance.
Your conveyancer can then:
- Identify the reason for the delay
- Communicate with the other party
- Discuss possible alternative settlement arrangements
- Explain relevant contractual provisions
- Help coordinate a new settlement date where appropriate
Early communication can make a significant difference.
Common Mistakes to Avoid
Waiting Until Settlement Morning
If you know there is a problem, tell your conveyancer immediately.
Assuming the Other Party Will Automatically Agree to a New Date
A settlement date cannot simply be changed without considering the contractual position.
Forgetting About Finance
Buyers should make sure their lender has everything required well before settlement.
Booking Everything Around an Exact Settlement Time
Settlement times can sometimes change, so allow some flexibility where possible.
Moving Into the Property Before Settlement
Do not assume that you can take possession before settlement.
Ignoring Additional Costs
Keep records of costs caused by a delay and ask your conveyancer about your rights.
Frequently Asked Questions
What happens if settlement is delayed?
The consequences depend on the reason for the delay, the Contract of Sale and which party is responsible. The parties may be able to agree on a new settlement date.
Can the seller charge interest if the buyer is late?
Default interest may apply depending on the contract and circumstances.
What if my bank is not ready for settlement?
Contact your lender and conveyancer immediately. Your lender may need to resolve the funding issue before settlement can proceed.
Can I get compensation for a delayed settlement?
Potentially, depending on the circumstances and the contractual rights of the parties. Not every expense will necessarily be recoverable.
Can settlement be moved to another day?
It may be possible if the parties agree. The new arrangements should be properly documented.
Can I move into the property before settlement?
Generally, you should wait until settlement has occurred unless an appropriate arrangement has been agreed.
What happens if I am buying and selling at the same time?
A delay in your sale can potentially affect your purchase if you are relying on the sale proceeds. This is why connected transactions should be carefully coordinated.
What if the delay is caused by the other party?
Your rights depend on the contract and the circumstances. Contact your conveyancer so they can explain your options.
How Prox Conveyancing Can Help
At Prox Conveyancing, we understand that settlement delays can be stressful for both buyers and sellers.
If your settlement is delayed or you know that you may not be ready to settle on the scheduled date, contact us as soon as possible.
We can communicate with the other party, your lender and the relevant settlement representatives and help you understand the conveyancing and contractual aspects of the situation.
The earlier we know about a potential problem, the more opportunity there may be to work towards a practical solution.
About the Author
Meet Sally
Sally Kwok is a Licensed Conveyancer and the Director of Prox Conveyancing. With more than 16 years of experience in the conveyancing industry, she is committed to helping buyers and sellers navigate Victorian property transactions with confidence. Sally is passionate about providing clear communication, practical guidance and personalised service throughout every stage of the conveyancing process.
👉 Learn more about Sally on our About page.
About Prox Conveyancing
Prox Conveyancing is a Victorian conveyancing practice providing professional conveyancing services for residential property transactions across Victoria. We assist buyers, sellers, investors and families with a wide range of conveyancing matters, delivering personalised service, transparent communication and professional support from contract through to settlement.
👉 Learn more about Prox Conveyancing on our About page.
This article provides general information only and is not legal advice. Every property transaction is unique, and the information above may not apply to your particular circumstances. If you require advice about your specific situation, please contact a qualified legal professional or licensed conveyancer.