Delayed settlement can occur if neither party is able to meet the settlement date. This could happen for several reasons; for example, the funds necessary to complete the transaction haven’t arrived yet, or there’s an error or delay with a necessary piece of paperwork on either party’s end.
Some states and territories have grace periods of varying lengths within which the settlement can be delayed without either party incurring a penalty. However, some places have no such grace periods, so be sure to check with your state or territory’s government revenue office or on its website.
If settlement is delayed so long as to incur a penalty, the terms of this penalty will be stipulated in the contract of sale that has been signed by both parties. Penalties can range from an interest charge to the loss of your upfront deposit and a termination of the contract.
In the event of a late or delayed settlement, the buyer and seller may be able to negotiate a new future settlement date.
You can’t prevent the other party from potentially making mistakes, but you can do your part by ensuring that you’ve done everything necessary and have all the appropriate resources on hand to facilitate a problem-free settlement day.
Technically yes, you can move in as soon as final settlement is concluded and you’ve collected the keys. Whether you’ll want to do this may vary depending on whether or not you’re ready to move in and if your utilities are connected. But in the eyes of the law, you’re now the owner of the property and can do as you please!
Yes, you’re allowed to inspect the property before settlement day. In fact, you’re generally encouraged to do so as part of your due diligence as a buyer. A final inspection lets you make sure the property is in the same condition as it was when you agreed to buy it.
Things that can go wrong on settlement day typically fall into one of two categories: money problems and documentation problems. Some potential settlement day issues include:
The best way of preventing these issues from popping up is simply by being prepared and having your documentation and financial matters sorted well in advance of settlement day.
Yes, lenders will generally refuse to let a buyer finalise the settlement process until they’ve insured the property in question. A buyer can legally take out a home and contents insurance policy for a property they’re buying once they’ve signed the contract of sale.
As this happens well before settlement day, you should generally seek to insure the property you’re buying as soon as possible after signing the contract of sale.