Buyers and sellers of land generally succeed in completing settlement on the agreed settlement date. However, settlement may be delayed due to an unforeseen event.
So what happens if settlement is delayed?
The standard-form contract used in WA, known as the Contract for Sale of Land or Strata Title by Offer and Acceptance, includes a set of general terms and conditions. Of these general conditions we can make these general remarks:
- there’s a grace period of three business days after the agreed settlement date. Neither party can claim compensation if settlement takes place within the grace period;
- after the grace period, the party (buyer or seller) causing the delay in settlement must pay the other party compensation, commonly referred to as penalty interest;
- penalty interest is calculated at the rate of 9% per annum on the balance of the sale/purchase price;
- penalty interest is payable at settlement – for buyers it’s added on to the purchase price; for sellers it reduces the sale price.
If settlement is delayed by more than a few days, things can get complicated. If you’re unsure where you stand it’s best to obtain legal advice. As your independent settlement lawyers, contact us to book a 30 minute consultation ($198) or a 60 minute consultation ($385).
How we can help
At Flat Rate Settlements we have state-of-the-art systems to ensure we complete your settlement in an efficient manner. If penalty interest may be an issue in your settlement, in the first instance your Flat Rate Settlements file manager will discuss your options with you.