What Happens If A Property Settlement Is Delayed In Queensland?
- RHC Solicitors
- 5 hours ago
- 6 min read
Settlement is the final step in a legal process of transfering property ownership, where the balance of the purchase price is paid and legal ownership transfers from seller to buyer. When settlement is delayed, it can create financial pressure, uncertainty, and in some cases serious legal consequences.
While most property settlements in Queensland proceed on time, delays do occur. Understanding why settlements may be delayed, what your rights are under the law, and how REIQ contract clauses affect settlement dates is essential for both buyers and sellers.
In This Article:
Settlement Timeframes And Why The Date Matters
In Queensland, residential property contracts typically provide for a settlement period of 30 to 90 days, although shorter or longer timeframes can be negotiated between the parties prior to contract signing, and during the course of a matter.
Once agreed, the settlement date becomes a binding contractual obligation. Unless the contract allows an extension, or both parties agree to such extension, settlement is expected to occur on that date. A failure to do so may place one party in default, triggering rights to interest, compensation or termination.
What Are The Consequences Of A Delayed Settlement?
A delayed settlement can result in both financial and legal consequences, even where the delay is caused by a third party such as a bank (in specific circumstances as we'll discuss below).
Depending on the circumstances and the contract terms, the non-defaulting party may be entitled to:
charge default interest
recover losses caused by the delay
issue formal notices requiring settlement
terminate the contract in serious cases
Additional costs may also arise, including extended loan interest, bridging finance, storage and accommodation expenses.
Why Settlements Are Delayed: The Most Common Causes
Rather than arising from a single issue, settlement delays often result from a combination of administrative, financial and practical problems. Let's explore some common reasons why a property settlement may be delayed.
1. Bank And Finance Delays
Finance-related issues are the leading cause of delayed settlements.
These may include:
slow loan approvals
delays in mortgage documents being prepared or signed
errors in mortgage documents or last-minute changes to requirements
banks failing to discharge an existing mortgage on time
Valuation shortfalls can also disrupt settlement. If a lender’s valuation is lower than the contract price, the buyer may need to renegotiate, contribute additional funds or reapply for finance, all of which can delay settlement. This is why we always recommend buyers consider obtaining pre-approval prior to securing a property. It helps you, and your lender, understand your borrowing power, and streamlines the formal finance approval process to ensure documents have been completed.
Even a minor banking error can prevent settlement from proceeding, as funds cannot be released or titles cannot be transferred without correct documentation.
2. Paperwork And Administrative Errors
Conveyancing involves multiple legal and financial documents, including transfer documents, loan documents and settlement statements.
Errors such as:
incorrect spelling of names
mismatched identification details
missing signatures can require documents to be reissued and reapproved, often restarting the bank’s internal processes and delaying settlement
Engaging a reputable, professional and experienced legal representative is essential to ensuring your transaction is handled accurately and efficiently. Firms such as RHC Solicitors provide the proper attention to detail needed to mitigate any administrative errors early, helping you avoid unnecessary delays, complications or costly issues later in the process.
3. Valuation And Finance Shortfalls
Where a contract is subject to finance or valuation, delays can occur if the lender’s valuation comes in below the purchase price.
This may require:
renegotiation of the contract
the buyer contributing additional funds
or a new finance application
Each of these steps can significantly extend the settlement timeline.
4. Final Inspection And Property Condition Issues
Firstly, we always recommend buyers undertake a final pre-settlement inspection on the morning of settlement to ensure the condition of the property is the same as when you signed the contract, and that any special conditions under the contract (such as building/rectification works) have been attended to.
Problems discovered during the final inspection, such as damage, incomplete repairs or vacant possession issues (an existing tenant has not vacated before settlement), may justify delaying settlement depending on the terms of the contract.
If the seller has caused unreasonable damage between contract and settlement, settlement may need to be postponed until the issue is resolved.
5. Linked Transactions
Settlement delays frequently occur where one transaction depends on another, such as when a buyer must sell an existing property before purchasing a new one.
What Happens If The Seller Delays Settlement In Queensland?
Queensland law provides buyers with clear protections. If a seller is not ready to settle on the due date:
the buyer is not obliged to agree to an extension.
the buyer may issue a notice confirming they are ready, willing and able to settle.
the buyer may reserve the right to terminate the contract if settlement does not occur.
the buyer may agree to an extension in exchange for default interest.
The appropriate response will depend on the wording of the contract and the circumstances of the delay.
The Unilateral Extension Clause In REIQ Contracts (Standard Term 6.2)
In January 2022, the standard REIQ residential contracts introduced Standard Term 6.2, which significantly changed how settlement delays are managed in Queensland.
What Does Condition 6.2 Allow?
Condition 6.2 permits either the buyer or the seller to unilaterally extend the settlement date by giving written notice to the other party:
before 4:00pm on the original settlement date
nominating a new settlement date up to 5 business days later
No consent from the other party is required.
Why This Clause Matters
This clause was designed to reduce the risk of contracts terminating due to last-minute delays, particularly where banks are not ready to settle on time.
Benefits:
provides flexibility where delays are outside a party’s control
reduces the risk of termination due to third-party default
allows settlements to proceed without restarting the entire conveyancing process
Risks:
makes the settlement date less certain
a party who is fully ready to settle may still be forced to accommodate a delay
moving arrangements, finance timing and possession plans may be disrupted
Unless the contract includes a special condition overriding condition 6.2, parties must assume this extension right applies.
Late Signing And PEXA Delays (Standard Term 6.3)
A newer standard term 6.3 deals with late signing of documents in electronic settlements (such as PEXA). If you want to learn more about PEXA and electronic settlement, read our in-depth article here.
How Condition 6.3 Works
If, on the settlement date:
a party remains unsigned in the PEXA workspace between 3:00pm and 4:00pm, and
does not re-sign before 4:00pm,
the settlement is automatically extended to the next business day.
This clause:
can only be used once per contract
cannot be relied on again if the issue repeats
Practical Impact
While this clause can protect parties from minor administrative delays, it can also complicate matters if:
the other party’s conveyancer is inexperienced, or
document execution is poorly managed late in the day
Planning For Settlement Delays Under REIQ Contracts
Buyers and sellers in Queensland should always plan for the possibility of a unilateral extension of up to 5 business days.
If it is critical that settlement occurs on the original date, for example, due to fixed finance arrangements, back-to-back settlements or specific possession requirements, you should seek legal advice before signing the contract to ensure an appropriate special condition is included to exclude or limit the operation of condition 6.2.
How RHC Solicitors Can Help
If you are buying or selling property in Queensland and have concerns about settlement delays or REIQ contract conditions, our senior property lawyers can provide clear and practical advice tailored to your circumstances. We provide comprehensive contract reviews at an affordable price, and help ensure you understand the terms of the contract, provide a list of recommended changes to protect your interests, and can assist with further negotiations if needed.
Alternatively, if you're ready to get started, obtain a free no-obligation conveyancing quote today to understand how we can help you.
Disclaimer: This publication is not intended to be comprehensive, nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication. The views and/or opinions expressed in this publication is that of the author and may not necessarily represent the views and/or opinions of RHC Solicitors.
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