What reasons could settlement be delayed?
Can you guarantee the settlement date?
These are some of the most common questions I get asked during a conveyancing matter. Of course – I completely understand why! You need to know what date you’re getting your money, what day you need to book the removalist for and bribe all your friends to help you move. It’s one of the most important factors for you when you are buying or selling property.
Unfortunately I can’t guarantee the settlement date any more than I can guarantee that I personally will be alive tomorrow to help you with your conveyancing. I certainly plan to be – but some things are just outside of our control – and I only make guarantees that I know I can honour.
With the property market starting to heat up, and particularly just after the Christmas break, I’ve noticed an increase of properties not settling on the agreed date under the Contract. This is probably caused partly by buyers entering into Contracts before they were ready in fear of missing out on the property to somebody else, and partly by losing some of the working days over the Christmas break for conveyancers, solicitors and banking institutions to process their paperwork in time for the settlement date.
In January we had 6 files not settle on the agreed Contract date and for each file the reason was because either the discharging or incoming mortgagee was not ready.
So the best lessons we can learn from these facts is that you should have your pre-approval ready with your chosen financial institution before you go looking at property, and then when you find the right house tell them straight away so they can give you the formal unconditional approval on that property. Find somebody accountable, it helps if they are also local, that you can check in with at your bank or building society so you can make sure that they will be ready for settlement.
You certainly can’t choose the timing of finding the right home, or the right buyer for your home, but if it happens around Public Holidays, consider lengthening the Contract time a little to allow financial institutions sufficient time to be ready. This may mean that settlement is a little longer than you would have ideally wanted, but you will be more likely to have your settlement go through on the intended date. Particularly if you are exchanging Contracts with your Real Estate Agent, you could suggest this option to them, and call your Conveyancer and lender before exchange to ask if they believe they can meet the expected settlement date. For example, over this past Christmas break our office returned to work on 2 January 2014, most other firms returned on 6 January 2014, and some didn’t come back until 20 January 2014. Everybody deserves a holiday, but obviously the amount of working days dictate when the matter will be ready for settlement, and this is a problem that can be foreseen, and worked around to give you a more reliable settlement date.
Lastly, be aware that even if every person does everything right – your property matter may still not settle on time.
Unfortunately disasters do happen from time to time and may mean that settlement is delayed, for example: – If the tenant doesn’t move out; if a caveat is lodged to say a person has an interest in the property; if the property is vandalised, or has storm damage, or if there’s a fire in the property.
But rest assured that the vast majority of property settlements do, in fact, take place on their Contract date.