Settlement Day – What If I Settle Late?
Unfortunately settlement day sometimes has a few hitches and in a worst case scenario you could find that settlement does not occur as expected. There are many reasons that this can happen and it is usually that time just ran out for all the necessary things to be done to complete the settlement day transactions. This is particularly the case when a settlement involves a chain of house sale and purchases.
You need to prepare for this contingency. Have a backup plan, a place to stay, a few days overlap on your current accommodation. Remembering also that settlement is usually on a Friday, and if it does not occur, Monday is the next day available day for this to happen. This can be a real hassle! It is always best to give yourself a few days to move then you can be reassured that if settlement is delayed you are unlikely to be left out in the cold.
You may be liable for some costs if you do not settle on time. As a minimum there is penalty interest payable at a rate set out in your sale and purchase agreement – this rate is usually a premium interest rate far in excess of your mortgage interest rate. Additionally you could be liable for any expenses incurred by the vendor directly related to your late settlement for example storage and accommodation costs.
Sometimes, settlement may happen, but the vendor may have not moved out! There have been many people who have found themselves waiting in a moving truck outside their new home while the old owners were still moving out. This usually just means a long night of unpacking in the dark – but with a very disorganised vendor you may have to find alternative accommodation through no fault of your own.
Failing to settle, or not being able to move in when you planned, rarely happens, but if it does happen, make sure you are not left homeless!
For more tips, hints and handy advice for the house buying process – check out our house buying guide.