In every Contract there is a set time for Completion, or ‘Settlement’ as it is often called. The time for Completion can be a set number of days or weeks after exchange takes place (eg 42 days or 6 weeks), or a set time after another event takes place (eg 14 days after a plan or subdivision has been registered).
Completion or Settlement is essentially when the Purchaser hands over their money and takes title to the property.
It is crucial that a purchaser in a property transaction is aware of the date that Completion is due under the Contract, as there are serious consequences when Completion doesn’t take place on time.
Most Contracts contain a condition that the Purchaser of a property may be charged penalty interest by the Vendor if Completion does not take place on the due date. The interest rate usually varies between 8 and 10 percent and is payable on the outstanding purchase price due at completion (that is, the purchase price less any deposit paid). Depending on the price of the property, the daily interest amount can be hundreds of dollars per day, for every day you are late settling your purchase.
Most Contracts also contain a condition whereby the Vendor’s representative can issue a Notice to Complete, which gives the Purchaser a further term (usually 14 days) to complete the Contract. This notice makes the completion time an “essential” term of the Contract. If completion does not take place at the end of the further term, the Contract can be cancelled and the Vendor may keep the deposit paid, usually equal to 10% of the purchase price.
On top of this the Vendor may also take action against the Purchaser for their costs on the resale of the property (eg agents fees) and also seek compensation if the property is sold for a lower sale price.
Purchasing a property is a rewarding but sometimes stressful exercise and it’s important to know your obligations under a Contract. The team at Everingham Solomons have the expertise to assist you, because Helping You is Our Business.
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