Purchasing your own property is one of the largest financial commitments you’re likely to make in your lifetime. It comes with many various stress factors – one of those being, delays in settlements.
Delayed settlements can occur when one or both parties can’t meet the settlement date.
With the Australian property market heating up more than it has in years, many people are taking advantage of high prices to upsize or downsize their living conditions. This has put stress on the industry, and that stress can multiply if either party in the deal are awaiting transfers of funds from sales of their current homes. Let’s take a look at the top causes of delayed settlements so you know what to look for.
It’s very common for buyers to seek finance approval from lenders such as banks, and for sellers they need to discharge their current mortgage. During the sales process buyers and sellers’ lenders arrange the finance and mortgage documentation.
There can be many issues that delay the mortgage processing.
Issues can include:
Make sure you have all relevant documentation ready before executing a purchasing or sales process and allow a generous time period in your contract for finance approvals and settlement. Talk to your broker or lender and try and pre-empt the issues or delays that might come up. Understand the mortgage process and what the lender’s requirements are.
If you have a complex finance setup and are selling an investment property your lender may be required to revalue other properties as well. As a vendor, it is important that you know how the bank has structured your finance if properties are cross-collateralised.
When buying a property, the final inspection is your last chance to identify any issues with the property itself. You could notice cracks in the wall, plumbing leaks or electrical issues that are not stipulated in the property report.
Finding things wrong at this stage of the settlement process can cause delays while things get changed or fixed.
As the seller, it is your responsibility that the property at the day of sale matches the condition of your home at the contract date. Ensure that major flaws that can sometimes be found such as plumbing, electrical and gas fixtures are all in good working order to avoid last-minute delays. Disputes at this stage are complicated and can often be avoided with good communication between yourself the Agent and Conveyancers.
Documents such as title deeds and Transfer of Land are necessary for any property transactions. They must be provided within the right timeframes as to make sure they are promptly returned during the settlement period.
Have all your information at the ready and speak to your settlement agent with a sense of urgency if anything is missing. Find your title deed well before settlement. Applications for lost titles take time. If you have a mortgage you need to make sure the discharge of mortgage is submitted to the bank early.
If your transaction is part of a property sale ‘chain’ where your sale is subject to the sale or purchase of another property, things can get tricky. The more variables involved means more moving parts across multiple buyers and sellers. While this is sometimes an unavoidable process, there are greater risks of a settlement delay.
There can be no avoiding the potential for delays if you need to sell one property to buy another. The only thing you can do is make sure you are extremely prepared for the whole process so that you avoid any delays.
Often if a chain of settlements fall over buyers can still move into a property under a licence agreement. It is not always guaranteed though.
The number one issue affecting settlements can be the actual platform being offline. Most settlements are electronic now and occassionaly either the banks or the platform experiences an issue. These are usually only short term but can be very problematic and have even lasted a whole day.
There is not much you can do when this occurs unfortunately. Your conveyancer will be checking your settlement and if you can’t settle due to a technical issue there are workaround options.
If you would like to avoid issues with the purchase or sale of a property, then you might want to contact a Conveyancing Lawyer for advice.
The Conveyancing Depot provides settlement services for people buying and selling properties, as well as contract advice and other property transactions with their team of expert property lawyers.
Contact Conveyancing Depot to speak to one of their experts so you can be assured you are getting the right advice during your property transaction.
Disclaimer: This article has been prepared for general information purposes and may not apply to your situation. This information should not be relied upon for legal, tax or accounting advice. Your individual circumstances will alter any legal advice given. The views expressed may not reflect the opinions, views or values of Conveyancing Depot and belong solely to the author of the content. © Conveyancing Depot Pty Ltd.
If you require legal advice specific to your situation please speak to one of our team members today.
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