Advice - late settlement

It's very common for paperwork to get lost, discharge form to go 'missing' and so on - the outgoing bank has a whole arsenal of stalling tactics.

Or, the broker may have forgotten to lodge the discharge at all - in this case it could be up to 3 weeks for the old bank to be ready.

 

Thanks. The agent has informed me that the discharge form "went missing" and the buyer didn't know about it until settlement date... They signed and returned the papers a long time ago. Hopefully it doesn't take 3 weeks for the bank to get ready.

 

I guess there is nothing that i can do now, except waiting and see how things turn out

 

This is a common story. Either banks do actually lose them that often or it's the most used coverup fib ever. Generally the buyer is innocent and it's their broker or the bank which stuffs it up.
I'm sure the buyer genuinely is trying to complete the sale and is stressing as much as you are.
I know it's stressful to you but it's very unlikely that it's going to fall over.
You now have another stressful weekend where nothing will be done but hopefully next week it will happen.

 

Its a fib, losing lenders love to play games on discharges. I once had one tell my broker "your client is lazy and hasnt bothered to send it in". They quickly changed their story when we quoted them the express post tracking number which showed delivery 2 days prior. Miraculously found 20 mins later and settlement booked.

 

It's funny how fast settlements can turn from "no" to "yes".

One settlement I had my bank's solicitor on the phone yell at me "this can't happen, this won't happen". I turned it around and the property settled early.

The most recent one we were told on the Wednesday before settlement was due that it would be another 2 to 3 months (sellers bank was having a dispute with itself!) after a couple of threats, settlement was booked in for Friday, 2 days later.

 

I dont know if i can send any threat hehe ... i wish i can, but not sure how. Who can i send it to ?

 

My settlement agent and my real estate agent don't have any more infor (or power) to offer.

 

But only the vendors signs it. Good reason why getting a solicitor to handle these things pays itself.

I had a client who got whacked with a $8K late fee when he didnt settle within 45 days or so. Took 2 months due to need to seek new finance (his lender found a last minute issue about size of property and backed out)...The $8k covered some rental issue I believe. If it was charged as penalty interest it would have been deductible under Steele's case (as he was buying an IP) but as it was a fee it wasnt interest. No deduction = capital.

He regretted not agreeing to pay a default rate ie 8% for the delayed period.

Also had a client sell off her land dev and one buyer had delays that took 4 months....KaChing. 8% on $1m for 4 months....

 

Paul: you scare me that this nightmare might go on forever !!! Oh no, i can't have a peaceful weekend.

 

Ours was that the bank would have to pay penalty interest and we just arranged for the threat to be conveyed through our conveyancer to the seller's conveyancer.

In your case, your conveyancer has already notified the buyer's conveyancer that penalty interest will apply, which is where your leverage ends at this point.

In my opinion it is a bit early to start worrying this much. My parents just settled a property in Adelaide late (as sellers). The buyer had a holdup with the settlement of a property they sold which delayed my parents settlement. It all went through although a little late.

 

The case Paul was talking about was not at all similar to what you are doing, so unlikely to have any relevance.

This "nightmare", which is actually fairly normal for selling a house, won't go on forever. You can set a deadline for settlement then ask a solicitor to issue a notice to complete. If the buyer can't complete the contract then you can choose to put the house on the market. Depending on the conditions of the contract you may have to return the deposit or you may keep it.

It would be better to let things play out. More than likely, if it was going to fail it would have failed by now.

 

Not in WA. In WA, an Offer and Acceptance is not valid until both the Vendor and Purchaser have signed the Offer and Acceptance and both have agreed to the deposit. The deposit is suggested but the Purchaser, not the vendor, although it is negotiable after that.

 

If they had to change something, or change banks, I would not be worrying in a week.

Ask your person doing the conveyance all the questions would be best.

 

Hi everyone. Thank you for all the replies. It seems that the banks are all ready now, so settlement might occur soon. The buyer has requested a reduction of the penalty interest, which is calculated daily based on 9% interest. Did anyone ever consider the reduction and by how much ? Thanks.

 

Why would you give a reduction?
They are locked in and have mucked you around and you have also incurred extra interest.

 

Up to you, but when I buy, if the rate asked is out of whack, I ask for it to be changed before entering the contract, as you never know what may hold things up.

So it is up to you to decide if it was reasonable. Say they were a first home buyer and seemed to be doing whatever they can, then I would prob side with no penalty, if it was someone being lazy or not nice during the sale, no way hosay.....

 

How much has it actually cost you?

 

The penalty is there for a reason.

 

It costs me a lot more, because the settlement date was delayed for 1 month. So, I paid an extra 4.5% for the whole month. I wanted to go with the other offer, but they were asking to give them a chance to apply for the finance from the other bank. They had 5 weeks from the finance approval until settlement date. For the 2 extra weeks delayed, I paid 4.5% interest + holding cost e.g. Rate, insurance,.... so overall, I still pay more out of pocket. Thanks everyone.