What Are the Most Common Reasons a Property Settlement Gets Delayed in NSW?

Settlement day is in the diary.

The removalist is booked. The fridge has been emptied. You’ve arranged to collect the keys at 2pm and you’ve already mentally chosen where the couch is going.

Then your conveyancer calls.

“We may have a problem with settlement.”

Not exactly the phone call you were hoping for.

The good news is that most property settlements in NSW happen when they’re supposed to.

But delays do happen.

Sometimes they’re resolved within an hour. Sometimes settlement moves to another day. And sometimes the issue is more complicated.

Here are some of the most common reasons a property settlement gets delayed in NSW, and what actually happens when it does.

1. The buyer’s bank isn’t ready

This is a common cause of settlement delays.

Having your loan formally approved doesn’t necessarily mean your lender is completely ready for settlement.

There are still things that need to happen behind the scenes. Loan documents need to be signed and returned, the lender needs to complete its settlement requirements and the funds need to be available for the electronic settlement.

Sometimes everything looks perfectly fine until settlement gets very close.

Then the bank announces it needs something else.

Banks do enjoy keeping things interesting.

If you’re buying with finance, make sure you respond quickly to requests from your lender or broker and return any loan documents as soon as possible. Our conveyancing for buyers page covers what we need from you and when.

And if your conveyancer starts asking whether your bank is ready for settlement, we’re not being unnecessarily anxious … it’s not our first rodeo!

2. The vendor’s bank isn’t ready

Buyers aren’t the only ones with banks.

If the vendor has a mortgage over the property, their lender needs to be ready to discharge that mortgage at settlement.

If the discharge hasn’t been properly arranged or the vendor’s lender isn’t ready, settlement may not be able to proceed.

This can be particularly frustrating for a purchaser because there is very little you can personally do about it.

Your conveyancer will liaise with the vendor’s representative and monitor the position.

Sometimes the answer really is:

We’re waiting for the bank.

Nobody enjoys that answer, including us.

3. Something goes wrong at the final inspection

The final inspection usually takes place shortly before settlement and gives the purchaser an opportunity to check the property before completion.

Most final inspections are uneventful.

You walk through, confirm everything is where it should be and start measuring the fridge space.

Occasionally, however, there’s a problem.

An inclusion listed in the contract might have disappeared.

There may be damage caused while the vendor was moving out.

The property may not have been left vacant when vacant possession is required.

Or there may be some other issue with the condition of the property that needs to be addressed.

What happens next depends on the issue and the terms of the contract.

Sometimes it can be resolved quickly between the parties.

Sometimes an agreement can be reached that allows settlement to proceed.

And sometimes the issue is significant enough that settlement can’t proceed as planned.

Call your conveyancer immediately if something isn’t right at the final inspection.

Preferably before you start negotiating directly with the agent, the vendor, their neighbour and the removalist.

4. A contractual requirement hasn’t been dealt with

Sometimes the contract requires something specific to happen before settlement.

There may be a special condition requiring documents to be provided, an item to be removed, work to be completed or another obligation to be satisfied before completion.

If that hasn’t happened, it can create a problem.

This is why special conditions matter.

They’re not decorative pages added to make the contract heavier.

They create contractual obligations, and those obligations need to be monitored throughout the transaction.

5. There is an issue affecting the title or settlement

Occasionally an issue arises that needs to be resolved before the property can be transferred.

For example, there may be a caveat or another dealing affecting the title that needs to be removed or dealt with.

The precise consequences depend on the nature of the issue and the contract.

Some problems can be resolved without affecting settlement.

Others take longer.

This is part of the reason conveyancing doesn’t stop once you’ve signed the contract. There is still work happening between exchange and settlement to make sure the transaction is ready to complete.

6. You’re selling and buying on the same day

This is where things can become particularly exciting.

If you’re selling one property and using the sale proceeds to purchase another, the two settlements may be linked in PEXA.

Rather than the money from your sale landing in your bank account before you can use it for your purchase, the required funds can flow directly from your sale settlement into your purchase settlement.

In other words, both transactions are connected and settle simultaneously.

Think of it as a property version of a Rubik’s Cube.

Your sale has to be ready.

Your purchase has to be ready.

Your purchaser has to be ready.

Your vendor has to be ready.

The banks have to be ready.

The figures have to balance.

The PEXA workspaces have to be linked correctly.

And somehow, everything has to line up at exactly the right moment.

When it does, it’s beautiful.

When one piece doesn’t line up, however, the whole thing can stop.

That’s why linked settlements need careful coordination, and why we become particularly interested in everyone’s readiness as settlement day approaches. If you’re planning a simultaneous sale and purchase, our guide to how long it takes to buy a house in NSW covers how the two timelines need to line up.

7. The PEXA workspace isn’t ready

Property settlements in NSW are generally completed electronically through PEXA.

For settlement to occur, all of the participants need to be ready.

That can include the purchaser’s conveyancer, the vendor’s conveyancer, the purchaser’s lender and the vendor’s lender.

The figures need to balance, documents need to be signed and everyone needs to be ready for the workspace to settle.

Usually, all of this happens quietly in the background.

You don’t need to sit at your computer refreshing PEXA while clutching your house keys.

That’s our job.

Well, not the clutching-the-keys part.

What actually happens if settlement is delayed?

This depends on why settlement hasn’t occurred and which party is responsible.

A delayed settlement doesn’t automatically mean the contract is cancelled.

Far from it.

If the purchaser isn’t ready to settle when required, the contract may entitle the vendor to charge interest and potentially recover certain costs.

Depending on the circumstances and the contract, a party may also ultimately be entitled to serve a Notice to Complete, requiring settlement within a specified period.

That is a much more serious stage of the process.

But most short settlement delays don’t immediately turn into dramatic contractual showdowns.

Usually, everyone wants the same thing:

Get the property settled.

The conveyancers work out what has gone wrong, what needs to happen to fix it and when settlement can realistically proceed.

Will I have to pay penalty interest?

If settlement is delayed because the purchaser isn’t ready to complete, interest may be payable under the contract.

The amount will depend on the contract, the purchase price and the length of the delay.

There can also be practical costs that have nothing to do with the contract.

Removalists may need to be rescheduled.

Furniture may need to go into storage.

You may need somewhere to stay.

If you’re selling and buying simultaneously, a delay can affect both transactions.

This is why we take settlement dates seriously.

It’s not simply a date somebody typed onto the front page of the contract six weeks ago.

People have arranged their lives around it.

Should I book my removalist for settlement day?

You can, but understand that settlement dates aren’t guaranteed until settlement actually occurs.

Most settlements proceed as planned, but unexpected issues can arise.

If you’re booking removalists, particularly for a purchase, it’s worth asking what happens if you need to change the time or date at short notice.

And please don’t arrange to meet the removalist at your new house before settlement is due to occur.

You don’t own it yet.

We admire the optimism, but the keys aren’t yours until settlement has actually gone through.

Can a delayed settlement be avoided?

Not every delay can be prevented.

Sometimes an issue genuinely arises that nobody could reasonably have predicted.

But good preparation certainly reduces the risk.

For buyers, that means keeping on top of your finance, responding promptly to your lender and conveyancer, completing your pre-purchase due diligence and letting us know immediately if anything changes. Our conveyancing for buyers page has more on what that looks like in practice.

For sellers, it means dealing promptly with mortgage discharge requirements, providing anything requested for settlement and making sure the property is ready to hand over as required by the contract — our conveyancing for sellers page covers the seller’s side of the process in more detail.

And for us?

It means keeping an eye on all of the moving parts and chasing things before they become settlement day emergencies.

Because an email saying “Just checking this is on track” is considerably nicer to send a week before settlement than “URGENT – SETTLEMENT TODAY” at 2.47pm.

What if settlement is already looking shaky?

If we can see that something may affect settlement, we’ll let you know.

Part of our job is keeping an eye on the transaction as settlement approaches, including the other side, your lender and, where we’re also acting on a linked sale, both PEXA workspaces.

If something isn’t lining up, we don’t wait until settlement time and hope for the best.

We start chasing.

Sometimes the issue is resolved quickly and settlement proceeds exactly as planned. Other times, we may need to discuss the problem with you, speak with the other side or work through what happens next.

There are, however, some things only you can tell us. If your broker contacts you about a finance issue, something comes up at the final inspection, or your circumstances change in a way that could affect settlement, let us know straight away.

The aim is simple: identify problems early, deal with what we can, and keep settlement day as boring as possible.

Keeping settlement day as boring as possible

At MG Conveyancing, our preferred settlement day is a boring one.

Everyone is ready.

The figures balance.

The banks do what they’re supposed to do.

Everyone signs off on time.

We call you.

You collect the keys.

Done.

Behind that very uneventful few minutes is a lot of work making sure the transaction is actually ready to settle.

We act for buyers and sellers across Sydney and the Central Coast, managing the conveyancing process from contract through to settlement and keeping you updated along the way.

And if something does go wrong?

We’ll explain what’s happening, what it means and what we’re doing about it.

Preferably without sending your blood pressure through the roof.

Buying or selling property in NSW? Get in touch with MG Conveyancing and we’ll help get you from contract to keys, with as little settlement day excitement as possible.