Advice - late settlement

Dear all
Just after some advice regarding late settlement. I sold my investment property and it was supposed to be settled last Thursday. The buyer had to refinance their house to a new bank, one of the big 4 from another big 4 (I guess they want to access their equity), but the old bank was late with the paper work. Meanwhile, the new bank is ready with the document. It's been a week now, and the paper work is still not ready. Is it common and how long does it often go for ? Thanks.

 

Yes I agree - it does happen, but that doesn't necessarily mean it is the cause of the delay.

 

Yes, the settlement agent has notified the buyer that they have to pay penalty interest. Is there any chance that the contract doesn't go through at all given it's so close ?

Terry: what do you mean about : "but that doesn't necessarily mean it is the cause of the delay." Thanks.

The bank that is delayed is Wespac.

 

Yes it is possible it won't settle, but 99.9% do.
Anything could be the cause - finance not approved, not enough money, sale hasn't settled et.

 

Thanks.

Just curious, what happens if it doesn't settle. Will the buyer lose their deposit (1.4% for this case) ? Can the buyer just walk out and say that they don't want to buy anymore ?

They buyer settlement agent said that the buyer is working hard with the bank to get it ready as soon as possible, but it's been a week now. Is it common ?

 

I don't know what you agreed upon, but it is likely you could keep their deposit if you do things right.

Its not common to not settle on time, most would settle on time.

Don't worry too much yet.

 

I gather this is in WA?
After their 3 days grace you will be getting penalty interest until it Settles. They are legally obliged to complete the contract and can only get out of it if you agree to it if they have met all the conditional items in the contract.
The situation that you aren't in is one of the more common late scenarios where one bank needs to discharge the loan and another bank pick up the loan. Discharging loans for some reason quite often has a last minute fork up that could have been prevented if everyone didn't leave it to the last minute.
As last resort yes you could keep the deposit for them not completing the settlement.

 

I missed that - just 1.4%? Do you have a special condition that the full 10% is the deposit with the other 8.6% payable on completion of the contract or to you if completion does not happen?

 

I didn't handle the deposit. The realestate agent put in 10K in his contract. He said that it's quite common in WA. Yes, the discharging bank is the delayed one, while the new bank is ready to settle. Hopefully it will work out as I don't want to go through the "sale" process again. We did get quite a few offers at that time, but chose this one.

 

frig! What would you let that happen? The real estate agent works for the vendor - so supposed to be working for you, but not acting in your best interest.

 

The deposit is quite inadequate.

Especially if the RE agent drew up the contract, which probably states that the agent is paid his commission once the contract goes unconditional. In most cases the commission is more than $10K......
Marg

 

We don't take deposit very seriously in WA. I can't remember what my last one was but it would have been $4k or $5k for a ~$500k purchase. It's a token sum.

 

It's my first time to sale something, but i remember that i paid ~1K for all my purchases before also (all in WA), so 10K didn't ring a bell in my mind.

 

Not in Western Australia. It's actually a bit on the high side based on my experience of purchasing property in Perth. This is how it works in WA:

"Deposit No deposit is required, however, an amount can be negotiated. The buyer and seller should consider whether the amount offered is sufficient to demonstrate a commitment to purchase in light of their individual circumstances. Generally, the deposit would not be more than 10 per cent, but is often considerably less." ​

https://www.commerce.wa.gov.au/sites/default/files/atoms/files/salebyofferandacceptance.pdf

In Western Australia, Real Estate Agents don't draw up contracts. We use a standard Sale by offer and acceptance with a contract developed by REIWA and the Western Australian Law Society.

Commission is on settlement, not on the contract going unconditional. The last place I bought had contracts go unconditional twice before I bought it. So the agent negotiated the sale three times with two contracts failing days before settlement, and only got paid the commission once. And people on this forum claim that real estate agents don't work for their commission!

 

Thanks. I still don't get why it takes so long for the old bank to get ready. It's been a week after the supposed settlement date now. How long does it normally take ?

I don't know if i can even get the deposit, if it doesn't go through. In this case, the new bank is ready for the refinance and the new morgage. The real estate agent spoke to the broker and said it's a 100% sure thing, but I'm still worried as i don't want to get back to the "sale" stage again. We got many offers, but then waited ~ 2 months for this.

 

Stressing won't change what will happen. The sale will either go through or it won't go through.

The only thing you can do is ask your conveyancer to get an update from the buyers conveyancer. Sometimes sales fall through but it's not that common.