Settlement day arrives. The other side isn't ready. What happens next comes down to penalty interest, rescission rights, and the notice a ready party needs to serve to protect their position. None of this resolves itself simply by waiting, and the steps taken in the days after a missed settlement can materially affect the outcome.
Delayed settlement is not rare, but the procedure for handling it in Victoria is precise, and acting outside that procedure, even with good intentions, can weaken an otherwise strong position.
Settlement delayed or at risk? Contact us before you accept an extension, not after.
Book a Free Consultation →What Happens If the Other Side Isn't Ready on Settlement Day?
Where one party is ready to settle and the other is not, the contract's general conditions typically entitle the ready party to claim penalty interest on the outstanding amount for each day settlement is delayed. This applies whether it is the vendor waiting on the buyer's funds, or the buyer waiting on the vendor's ability to hand over clear title.
What Is a Notice to Complete?
If the delay continues beyond a short window, the ready party can serve a notice to complete: a formal document requiring the defaulting party to settle within a specified period, commonly 14 days, and making clear that time is now of the essence. This step matters because it is generally a precondition to validly rescinding the contract later. Skipping it, or handling it informally, can undermine an otherwise valid claim.
What Happens If Settlement Still Doesn't Happen?
If the defaulting party still hasn't settled once the notice period expires, the other party may be entitled to rescind the contract, retain or claim the deposit, and pursue the defaulting party for any further loss, such as the cost of reselling the property at a lower price. These are significant remedies, and exercising them incorrectly can itself create legal risk for the party trying to enforce their rights.
How Phan Campbell & Associates Can Help
At Phan Campbell & Associates in Footscray, our conveyancing team advises buyers and vendors across Melbourne and Victoria facing a delayed or at-risk settlement, including preparing and serving a notice to complete correctly and advising on the consequences of default before either side takes an irreversible step.
Frequently Asked Questions
1. What happens if the other side isn't ready on settlement day?
The ready party can typically claim penalty interest on the outstanding amount for each day of delay, at the rate specified in the contract's general conditions.
2. What is a notice to complete?
A formal document requiring a defaulting party to settle within a specified period, commonly 14 days, making time of the essence. It is generally a necessary step before validly rescinding the contract.
3. What happens if settlement still doesn't occur after the notice period?
The other party may be entitled to rescind the contract, retain or claim the deposit, and pursue the defaulting party for further loss, such as the cost of reselling the property.
4. Should I accept an informal extension instead of serving a notice to complete?
It depends on the circumstances. Any extension should be properly documented, and the decision whether to serve a notice to complete should be made with legal advice.