What is the cost of not being able to settle?

If a buyer cannot settle on the due date, what sort of costs would the buyer have to meet? Assume settlement is 1-3 months later.

 

Depends what the vendor loses. They could terminate the contract and retain the deposit and then sue you.

The case of actress Toni Collette should be a warning
Toni Collette to pay up over failed house purchase

I have seen people pay signiifcant financial penalties to avoid termination and to delay settlement. And its not a negotiation point a buyer can really argue with. And I have seen people lose a LOT when they failed to settle. The deposit is just the start, add vendors loses incl their legals, your lawyers and a settlement to obtain release and it may hurt

 

Thanks. A bank screwed up badly, funds there but they will not release them. It took two weeks to get a reply, and this was false information, contrary to the terms and conditions. Legal action has commenced against the bank.

 

Settlement is meant to be at 10.00am tomorrow. I pay the vendor and she pays for a property she is buying, settling tomorrow.

In a few hours I will be sending the bank quite detailed Particulars of claim to show that I am very serious. My covering email will suggest that if the funds cannot be released from my account due to bank blunders then the bank lock my account. Then pay the funds needed for settlement into the mortgage offset account from any bank administrative account. A bank worth billions of dollars can surely spare $500,000 for a week with total security - funds in my locked account.

The Statement of claim details very significant costs if settlement does not proceed. Three buyers and vendors seriously inconvenienced. There's sparkies, plumbers, cabinets, carpet, painting, removalists and the like booked, deposits paid. Accommodation for the vendor I'm meant to be paying. Rental income foregone for the current PPOR. Legal fees. Probably more. The sale will also impact another three property sales that cannot be done due to cashflow issues. The total of all property is around $2.5 million.

All of this could be avoided if the bank had replied two weeks ago when I attempted to do a small test transfer, bank to my linked bank account. The test transfer did not work so I asked for help, no reply. This is bank policy, happened about a dozen times. I can prove this, hard evidence.

The bank only replied when AFCA finally contacted the bank. Maybe the Statement of claim and court reference will wake them up to the seriousness of the matter. Publicity will be another weapon. My case is rock solid with evidence, not just balance of probability but proved.

 

Aren’t you jumping the gun a bit - the process hasn’t failed yet?

Also, how did you do a ‘test transfer’? Isn’t it all bank to bank?

 

Settlement is at 10.00am tomorrow. The bank only responded when AFCA contacted them. Now I am showing that the matter will be listed, has a VCAT reference, and I have a good case. If I can apply a blowtorch to the bank they may transfer the funds in time, by 9.30am tomorrow.

I am not lodging anything yet, just showing that I'm serious and have everything ready to go. I avoid court if at all possible but once started there's no half measures. Nothing else has worked so maybe a legal document will get their attention. The bank takes a long time to reply and there is no more time, maybe 60-90 minutes tomorrow, depending on when they start work.

If the transfer is not made by 9.30am then I can show the court that the bank did nothing.

 

This won't happen I predict.

Settlement doesn't happen on time in about 10% of cases I think.
If it doesn't settle on time this has a flow on effect to others, but the bank will not compensate them as you are not liable for their expenses. Your expenses for tradesman etc are also too remote.

Usually a contract would have a notice to complete period of about 14 days because the vendor can rescind and keep your deposit.

Not sure what is going on here but banks usually don't pay monies into accounts but pay the vendor on your instructions.

If it is cash out then you would probably have even less a claim.

If you are suing you will probably be doing it for breach of contract. What terms has the bank breached?

ps is it Westpac?

 

What does this mean?

 

The vendor and her vendor will suffer loss, and that will be passed onto me. I will pass that onto the bank. On several occasions I was given assurances by the bank that the funds would be in my linked account, from where I could transfer it to the mortgage account. The bank gave false and contradictory advice quite a few times. The bank did not respond for two weeks, and only then due to AFCA. This is why I lodged the matter with the court, to give more pressure to the bank to act.

Sections 60 and 61 of Australian Consumer Law deal with services, which must be executed with due care and skill, reasonably fit for the purpose, and of a nature, quality and condition such that they can be expected to achieve a result that the consumer makes known to the supplier.

Section 62 Under the ACL, consumers can seek a refund, replacement or repairs if a supplier fails to satisfy its obligations in relation to consumer guarantees.

Section 267(3) If a supplier fails to remedy a failure within a reasonable time, a consumer will be able to have the failure remedied elsewhere and recover all reasonable costs incurred from the supplier, or terminate the contract for the supply of the services.

While the sale of a house does not constitute conduct in trade or commerce, ACL should be a guide when applying law. Also, ACL does apply to banks. I've used ACL in court against banks a few times and won all cases.

There are two sorts of compensation
* Direct loss; and
* Consequential (or Indirect) loss.
The exact meaning of consequential loss is unclear and to a significant degree depends on context.

The contract has a section related to default, Penalty Interest Rates Act, bridging finance, extra legal costs and more. I am advised that this is a standard provision. I will be sending this section to the bank and pointing out that they now know about the extra costs. That is, the loss for me is foreseeable.

If settlement does not proceed tomorrow I will suffer loss, and I will recover that loss. The loss falls under a few headings, and I will let the court and my lawyer decide on that. I will lay out the possibility of the vendor keeping the deposit and taking legal action against me. The deposit loss is foreseeable. My goal is to show the bank that I am serious, the amounts are significant and that there are two properties involved. Hence, the bank may take action tomorrow morning.

The bank with my money has a system for transferring funds to the linked account, at another bank in my case. As it's very late in the process, now I'm suggesting paying the funds into the mortgage offset account directly. Not hard. I'm sending a scanned written authority to do this.

I make no comment about the bank involved. If this matter goes to court then it will be a matter of public record and I can give it publicity. Banks don't like adverse publicity. I'm holding the threat of publicity in reserve.

Two weeks ago I attempted to make a test transfer, bank to the linked account. This did not work and I asked for the bank to contact me. There was no contact by the bank until late Friday when the bank referred to AFCA. I've contacted the bank maybe a dozen times and all they did was give false information and say that they would have someone contact me.

On 19 November 2018 the bank said:
"Please be advised the funds transfer ... will be processed in three to five business days."
I did not see this until 23 November as I had not logged onto the bank website for a week - no need and they did not email me. On 23 November the bank email said that the funds would not be transferred.

 

Your loss from tomorrow will probably be just penalty interest. Did you specifically agree to fund the vendors other costs?

I say you have little chance of succeeding. You might get some penalty interest reimbursed.

Properties fail to settle all the time and I even wrote a tip about it a few years ago:

Legal Tip 45: Avoid Agreeing to Settle a Property on a Friday https://propertychat.com.au/community/threads/legal-tip-45-avoid-agreeing-to-settle-a-property-on-a-friday.2320/


See also

Legal Tip 37: Don’t count of contracts completing https://propertychat.com.au/community/threads/legal-tip-37-dont-count-of-contracts-completing.1836/

 

Isn’t this usually sorted out by the solicitor or conveyancer and the relevant banks of purchaser and vendor (and any other involved professionals)?

When I have purchased properties, I didn’t have to do anything except sign a few documents.

I certainly didn’t have to organise the money transfer myself.

 

You would have to transfer funds to the solicitors trust account or allow the bank to draw at settlement - but this sounds like B is borrowing but not mortgaging the new property so the bank may not be involved in the settlement.

 

Has the bank told you why the funds wont be in your linked account.

 

I agree with Terry here, I am highly sceptical that you will be successful in any aspects of your claim against the bank for this sort of thing.

Who had that idea - was it a lawyer acting for you?

Even assuming the claim has merit, strategically it seems very poorly timed because you still haven't got what you need from your bank yet. I don't think they will respond how you hope they will... what if they pull the pin on your lending completely?

 

The funds are in an at-call high-interest account, proceeds of an IP sale. Most of these funds should have gone to my linked bank account at another bank, and then to the mortgage offset account, a third bank. The conveyancer would have access to the offset account. The bank with the IP sale funds has given a variety of reasons for not being able to transfer the funds, and has also said that the funds will be transferred. After that advice the bank said the account needed to be activated, which I had done but had to do again. The main problems are conflicting bank advice and not replying to my enquiry on 5 November. Mmm, just realised that this was three weeks ago!

I may not win the case and don't care much about winning. All I want is the funds in the offset account in time for settlement tomorrow.

The lending is not at risk. The LVR is low, I've borrowed from this bank before and my income is good. I just need to put the funds in the offset.

There's another aspect in that the contract says settlement is tomorrow but not when. The conveyancers agreed on 10.00am, but a bit later that day is fine. I want to make it as easy as possible for the vendor to settle her property buy tomorrow, so a morning settlement for my buy is sought.

 

And remember you don't have a right to borrow money. The lender has to be willing to lend it to you, and on their terms.

 

This is confusing.

So you are not borrowing money, but cannot access you own funds in the bank account?

 

Perhaps this may explain the situation.

Is there a $100,000 limit on debits?

Is there a $100,000 limit on debits?

 

You have to be crazy to have a failed transfer and just wait for them to reply when you need the money for settlement. Should have gone to the bank that day and drawn the money as a bank cheque or tt.

Anyway these linked accounts (prob with a bank with no branches) are a pain to operate. The big4 have high interest accounts. And they have branches for you to complain at.

Dont know about the legal implications (suspect your lawyers fees might eat up anything you might get), but it sounds a complicated setup that you didnt follow up on.

 

It is a bit confusing. There are three banks:
Main Bank - where I do most of my banking.
High Interest Bank - where the IP proceeds were parked for a short period while I bought the new PPOR HIB is linked to Main Bank.
Loan Bank - the same one that I had for the IP mortgage, including the offset account, which has the same number.

IP proceeds went to the Main Bank, and were then transferred to the High Interest Bank. Mortgage set up with Loan Bank. I needed to have most of the High Interest Bank funds transferred to my Main Bank account, and I would then move the funds to the offset just before settlement.

Since 26 September I have had very bad dealings with the High Interest Bank. I made about seven attempts to get someone to contact me, but this only happened after AFCA was involved, at 4.10pm last Friday. The day before I had a firm assurance from High Interest Bank that this was a priority and I would be contacted in the morning. As usual the bank broke an assurance. This seems to be their policy.

The High Interest Bank gave false and contradictory information, as well as advice that differed from that in the account terms and conditions. High Interest Bank staff are totally unreliable and have caused enormous problems. They are idiots.

I have attended a High Interest Bank branch in an attempt to get the PPOR funds but they would not deal, said it had to be online. Note that an online staffer said to go to a branch. Hopeless!

I have sent the High Interest Bank a detailed Particulars of claim and the section of the PPOR contract about not settling. I've detailed all the expenses that will be incurred if settlement does not proceed on time. Hence, the expenses are known, foreseeable. Three times I have given an alternative - lock my funds and pay the amount sought to Main Bank, using funds from a High Interest Bank administrative account or similar. No reply. This also seems to be their policy.

The mortgage is not much, LVR 17%. At one stage I had twice the mortgage in the IP offset. I can easily pay the mortgage.

I have attempted for three weeks to get answers and absent that it looks like we will be going to court. I have a legal background and can manage the hearings.

I will win at VCAT. I have a very solid brief, lots of screen shots, who said what when. Sections 60 and 61 of Australian Consumer Law deal with services, which must be executed with due care and skill, reasonably fit for the purpose. These sections have been breached.