Advice please - delayed settlement

Hi everyone

We're the buyers that have caused a delayed settlement as a result of our bank being very slow on the process and telling us the day before settlement said that one of our signatures didn't match the ID and they will need new docs and therefore not ready for settlement.

So we have sent in new docs and hoping to settle Friday/Monday, but on top of the penalty interest, the vendors are seeking $6k reimbursement because they lost out on a 'loan rate lock' and will need to pay an additional $6k over four years in interest? Solicitor has said they might not have legal grounds but it will cost me money to even fight it and it will drag out.

What should I do? Can vendors just really ask for any amount because the buyer couldn't settle on time by a few days? It feels really unreasonable when there's no way we could have known about their rate lock. Any advice please!

 

Yes,
But there would be no contractual reason to pay them.

Seek legal advice on what could happen if the refuse to settle. They might decide to keep and sell for a higher amount in this market.

 

That’s what I’m worried about, which essentially puts me in a situation where I have to pay whatever amount they ask for?

The only thing is that they have also bought...

my solicitor said it could go all the way to courts and they could terminate etc. I’m just at a loss.

 

Sorry, I don't understand what the relevance is. If you'd known, could you have settled on time?

 

No. I'm just saying it seems unreasonable that buyer would have to pay for difference in interest over four years based on an agreement vendor had with their bank. I don't feel like what kind of loan the vendor gets is any of my business or responsibility but it's really besides the point.

I would like to know what advice anyone else if they were in this situation, or if anyone has been in anything similar..

 

Firstly, make it clear to the vendor that you are sorry, explain exactly why you didn't settle, "it was/is the banks fault"

Then say sorry, you were not aware of their rate lock situation, you understand that they are upset and against your legal advice you would like to offer them $2k as a contribution toward their assumed loss, only because you do not want to further delay settlement by having lawyers and the legal costs associated with disputing the matter !

Sure they may come back with a counter offer, or they may just accept it to save the headache (if they pull out they still have to pay the agent their fee and all costs prior to going back to market)

Would you part with $2k to sleep better tonight ?

 

Thanks very much. I will try that tomorrow... if they don’t accept, does that mean we have to pay the $6k+? Which is what bugs me, doesn’t that mean any vendor can just ask for any amount of money in a rising market or threaten to terminate?

How do I talk to the vendor? Is it best that I go through the agent?

 

Basically as the only way to enforce the contract is through the supreme court

 

You are in breach of the contract. The vendor has the option to terminate, or you can negotiate with them to (effectively) agree not to exercise their right to terminate.

But looking at things from their perspective, @Stoffo is correct that they're already liable to pay the agent's commission whether you settle or not. So the power that you have in this situation is that if they terminate and go back on the market, they'll have to pay commission again, which is probably way more than $6K.

Balanced against that is that if they are likely to get a lot more from a new contract, they may be willing to take that risk.

As with all negotiations, it comes down to how determined are you to get this property? You can refuse to pay the $6K - you just take the risk that they'll elect to terminate.

Well, no, not if you weren't in breach. I get that it doesn't feel like your fault in an everyday sense of the word 'fault', but legally, it was your responsibility to settle on time, and unfortunately, you haven't been able to do that.

Out of curiosity, why did the signatures not match? Did somebody change their signature, or sign in the wrong place or something?

Via your conveyancing solicitor. The agent isn't on your side - they represent the vendor, and in this situation, may even prefer the vendor to terminate, as the vendor gets more $ (if the rising market part is correct), and the agent gets double commission. Win-win for them, lose for you.

 

You don't have to pay a cent, but is it worth risking the vendor terminating?
As per @Terry_w post, imagine the cost to enforce the contract
Definitely talk to your conveyancer/lawyer for their pov, then any offer/compromise should be made via them (in writting/paper trail)

 

I had a similar thing happen to me in relation to the signature not matching. Simple stat dec cleared it up quickly. Maybe also see it from their side.. IF they are telling the truth because of your actions they are out 6k, may have to cancel movers and pay fees, may have to delay settlement on their purchase and suffer penalty intrest. Meanwhile they may also be stressing wondering if you are going to be able to settle or not and they still have to pay commission.

 

It is so annoying when the lender's claim signatures don't match.
It wasn't AMP was it?

 

Thanks everyone - I don’t think we could have done anything on our part to avoid this delay and hence why we’re so frustrated. We provided everything as early as possible, had pre approval in place etc but the lender took ages and ages to get us loan docs. We only received mortgage docs 7 business days before settlement (after we provided everything we needed to weeks before this), and we posted them back via express and then it took them 5 business days to say signature doesn’t match (not AMP btw).

For some reason my solicitor told me to negotiate with the vendors via the REA. Maybe they felt like the vendors would listen to the REA, but I’ll ask the solicitor to negotiate now.

I get why the vendors are stressed, but to pay for their unrealised loss feels quite odd. Anyway, hopefully they will meet in the middle somewhere. I just want this to be over!

 

I am in a (not that much) similar situation in that I am the vendor and my buyers have failed to settle on time, costing me a fair bit of grief financially. My understanding was that you must serve the buyers with a notice to complete and a grace period to do this before as a vendor you are allowed to rescind the contract. I am sure your matter has been settled by now, but would be good if someone can confirm the above is true and not that easy to just 'rescind the contract' form the vendor's part?

 

that would generally be the case, subject to the terms of the contract. in NSW a notice to complete is generally 14 days.