Legal Hypothetical: Vendor claim for delayed settlement

 

Vendor claim for delayed settlement

JOEL wants a “sea change” and after finding his dream house, begins negotiations with the owner, Kathryn.

Joel has a lot to organise before he moves, so he asks Kathryn if she would be agreeable to a settlement period of 65 days.

Kathryn really wanted a fast settlement, but reluctantly agrees and the contract is signed.

In the meantime, circumstances change for Joel and he informs Kathryn that he can settle on day 40, being 25 days ahead of the agreed settlement date.

Kathryn is happy that settlement will occur early.

The day before the new settlement date, Joel is notified by his bank that the settlement will need to be postponed for 12 days.

Kathryn is very upset as she did not want the initial long settlement period, and now she will have to change her plans at the last minute.

Kathryn had ensured that the contract for the sale included an additional condition that if the purchaser failed to meet settlement date, then the purchaser must pay interest at 10% pa charged daily until completion.

Kathryn has calculated this cost to be over $3,000.

Kathryn asks her solicitor to ensure that Joel pays the interest at settlement.

Unfortunately for Kathryn, she is advised that she is not entitled to the interest payment, as the original contract had a 65-day settlement period and the conditions of the contract stipulate that interest is only payable if the contract is not settled on the completion date.

The contract was due for completion at day 65.

It is important to understand the implications of negotiating changes to contracts and to ensure expectations are kept in check.

Thank you to Anthony Fogarty for his assistance with this column.

If YOU would like a particular issue addressed, please email Manny at [email protected] or call him on (02) 6648 7487.

 

By Manny WOOD, Solicitor

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