Anyone Had Experience Where Vendor Wants to Extend Settlement Date?

choosk on 30/03/2021 - 19:43
Last edited 31/03/2021 - 00:13 by 1 other user

Hey all, I'm curious to see what people's experiences or knowledge are regarding this particular issue that my friends are currently experiencing:

A few weeks ago they settled on a property costing $900k, the owners insisted on a 90 day settlement so they can manage their investment home to end the tenants' lease with plenty of notice. The settlement is due on 31 May 2021 so my friends have made arrangements to end their current lease shortly after that so they have time to move.

Now the sellers are insisting on an additional 3-5 week extension for whatever reason, usually it wouldn't be a problem but my friends' loan approval expires on the 2nd week of June, and there's already tenants wanting to move into their current rental after their lease ends.

They're in active contact with their solicitors and apparently the sellers are willing to bring this to court if they don't get their way, which will then draw things out further and risk losing their loan and their rental.

Not looking for advice or anything, as their solicitor is managing this and providing them different options. Just want to see if anyone out here's experienced or heard of another similar situation and what the results were.

Financial

Comments

  • brendanm on 30/03/2021 - 20:24
    +9

    How is that legal if they have a signed contract agreeing to the date?

  • MrHyde on 30/03/2021 - 20:32

    See what the contract says in terms of penalties for delayed settlement. Although I think it would be more based on buyer delaying settlement. You may be able to negotiate lower price because you need to rent elsewhere for the 3-5 weeks.

  • TheBooleanOne on 30/03/2021 - 20:33
    +6

    Had it almost happen as purchaser when the vendor wanted to extend for the same reason. It didn't get to that stage, but our conveyancer was going to issue a notice to complete. This would have allowed us to recoup losses from them after 14 days.

    If they know this is going to happen, they should start the notice to complete as early as possible. At least that will show them they mean business.

    Edit: I don't know what state your friends are in, but it will likely differ if you're not in NSW

    • choosk on 30/03/2021 - 21:02
      +2

      Yeah, we all live in NSW. They said that their solicitor is prepared to issue a notice to complete if the sellers won't take no for an answer.

      • TheBooleanOne on 30/03/2021 - 21:18
        +2

        Yep, it seems they might string them along a bit to delay the notice to complete as well. Sounds like they're playing silly buggers.

        I'm sure the conveyancer has seen it before, they know what the best course of action should be. But it's not the end of the world. I would hope that the vendors would be willing to some sort of compensation for the inconvenience and cost of a delayed settlement though.

        What I found from my limited experience in buying property was that the vendor has the upper hand in the sale. They can even charge penalty interest for a small delay in settlement, but all you can do is issue a notice to complete.

    • stirlo on 30/03/2021 - 21:20

      Sure, but this affects more parties than just the vendor and purchaser.

      If settlements going to be delayed by the vendor the vendor should be resolving the issues with the landlord of the purchasers property and the new tenants and compensating everyone involved. After all they have the $900k to make things right.

    • Indomietable on 30/03/2021 - 21:31

      We had similar situation but in reverse where the purchaser want to extend the settlement date. Our solicitors handled everything and he said that the penalty rates is clearly stated in the contract. We ended up walking away with few thousand extras after 2 months delay.

    • Kail on 30/03/2021 - 22:10
      +4

      And where are these human beings supposed to live for the 3-5 weeks delay, exactly?
      Where do they store their belongings?
      Who will pay for the second set of movers fees?
      Who will provide the loan for them once theirs expires?

      Their delay could cost the buyers thousands, they need to either settle on the date they agreed to or compensate the buyer so they aren't out of pocket.

      • Seraphin7 on 30/03/2021 - 23:01
        +1

        Unfortunately, that's not the way it works.

        We basically have a broken system of property exchange in Australia that gives vendors almost all the power post-exchange.

    • CalmLemons on 31/03/2021 - 19:08
      -1

      Seeing from the downvotes, I'll make sure to charge penalties and extra where possible now then.

      Can't wait to see the thread, vendor took me to court for damages because I couldn't settle in time….

  • jellykingdom on 30/03/2021 - 21:18

    When my parents sold, the new buyer (from Shanghai) asked for 6mo settlement. It was quite stressful until it finally settled

    • Seraphin7 on 30/03/2021 - 23:00
      +3

      Respectfully, it was only as stressful as your parents allowed it to be. They agreed to the extended settlement (presumably to get a higher price) and that comes with additional hassles (perceived or otherwise) than a typical settlement period.

      • jellykingdom on 31/03/2021 - 09:00

        Yeah i'm not entirely sure the reason WHY they accepted that if i'm being honest

  • Donaldhump on 30/03/2021 - 21:39
    +2

    They pay for your hotel until you can move in, along with all other costs.
    Milk it for free holiday

  • MorriJ on 30/03/2021 - 22:26
    +2

    More information please?

    What state is this transaction playing out in? edit: can see above it's NSW

    NSW there is little to compel a seller to execute the transaction on time; the buyer is subject to penalties per the standard contract, but there is little to compel a seller to complete the transaction.

    If there wasn't a condition placed in the contract by the buyer regarding settlement delay penalties, they aren't going to have much to go on.

    When I bought in 2020, the seller wanted to delay settlement at the 9th hour as there was a storm and he was worried he wouldn't be able to get out in time. Same deal with me. Ended up using an excavator to clear the road and get the trucks in to get him out.

  • elgrande on 30/03/2021 - 22:53
    +1

    Maybe vendor wants them to pull out. You mentioned it sold for $900k a few weeks back.. it would be worth more than a mill by now..

    • JIMB0 on 31/03/2021 - 07:44

      Or sell it to someone else for more money. Hope they lodged a buyers caveat.

  • Seraphin7 on 30/03/2021 - 22:58
    +2

    In NSW (can't speak for other states), it's basically all in favour of the vendor.

    That's plenty of articles you can search up that say this, say that, but when you read through them, basically the vendor can give you a big up yours and there's actually not much you can do about it.

    Broken system.

  • DrRalph on 30/03/2021 - 23:05
    +2

    Vendor can do this. Not uncommon. Don't fight it. Waste of time and money.

  • MS Paint on 31/03/2021 - 00:07
    +1

    The settlement is due on 31 May 2020

    Looks at calendar.

    Yep. Just what I thought.

    • choosk on 31/03/2021 - 00:12

      My bad, 2021! 😅

      Updated.

  • brad1-8tsi on 31/03/2021 - 00:10
    +3

    We were 1 day late in settling due to our incompetent solicitor. It cost us $2000 in compensation as the vendors furniture had to be stored overnight plus a 2nd day removalist hire and accomodation. It was written in the contract.

    I would be asking for compensation for rental of a a serviced apartment for the delayed settlement period. This is the vendors problem for agreeing to a delayed settlement for the house they were purchasing.

  • kokita on 31/03/2021 - 01:22
    -1

    Happened to one of my friend last year. I am suspicious that the vendor did not want to settle because the vendor promise with rental guarantee. We all know that rental market crashed during covid.

    He could not do anything as the contract always on the vendor side.

  • TheBird on 31/03/2021 - 01:24
    +1

    Just want to see if anyone out here's experienced or heard of another similar situation and what the results were.

    I've done it once. I screwed up in my understanding of potential pitfalls of payment schedules and potential bank delays. After talking with my solicitor, I talked to the owner to discuss delaying settlement a week to allow for delays. It surprised them as I wanted an expidated settlement. I offered a token compensation (about the equilivent of a weeks rent) and they were fine. Ended up only needing an additional day or two.

    Communication was key.

    Everyone was happy in the end.

  • GG57 on 31/03/2021 - 13:22
    +1

    Late to this post, but:
    We had a similar situation, but as the vendor.
    We approached the buyer (through the agents) and suggested we settle on the agreed date, but we then rent from the new owner for 3 months. That scenario suited us and the other party.

    For a 3 - 5 week extension, you could suggest the same arrangement and make sure that the rental income covers your costs for short-term accommodation or whatever other expenses you might reasonably incur.
    You also get the piece of mind, and the $ in your bank.

  • wsqwin on 01/04/2021 - 10:42
    +2

    Yes this shit happened to me during Easter last yr. Vendor wanted to delay the settlement but I have arranged NBN, movalist, utilities etc. We signed an agreement so that I could move in first, and agent said vendor's bank should be able to finalize everything in 2 weeks. Then after 2 week, agent called me saying vendor needs more time and wanted to charge rent on me. I contacted my conveyancer and she suggested issuing a notice to settle within 2 wks or we withdraw from the sale. And vendor settled in 2 days.

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