Contract Terms – In November, check your settlement date (Part 3)

What can I do if I’m buying or selling property in November or December?

I’ve been writing about the issues of buying or selling property between mid-November and throughout December. In these transactions, the standard 42 day settlement period which appears in the Contract of Sale of Land means the completion date falls anywhere between Christmas and New Year. As the holiday season or festive period, this can create a number of logistical problems as businesses close down or are short staffed which makes it more challenging when trying to get things done – not to mention, settle a property transaction. I’ve already written about the different issues and the things that you can consider, but now you’re ready to do something – so read on.

You’re aware of the issue now, you’ve spoken to the agent, your lawyer or your conveyancer, and you still want to proceed with buying or selling your property – what do you do next? As discussed in the previous article, there are a few options available to you, but here are 3 obvious options to consider.

Doing nothing

Doing nothing or changing nothing is the path of least resistance. If you choose to keep the settlement period so that the completion date falls within the Christmas/New Year period, the advantage is that the negotiation is simple (ie, you do nothing), however the disadvantage is that you potentially create issues around settling on that completion date – as discussed in these articles. After all, that’s why I’ve written these articles, it’s to prompt you to consider doing something. My recommendation? Do something. Don’t select this option.

Bringing settlement forward before Christmas

The biggest advantage of doing this is ‘getting it out of the way’. There’s a lot to say about finishing things before Christmas. Naturally, the weeks in early December leading up to Christmas are some of the most hectic. Many people just want to get things done and finalised, probably before they head off for holidays with a clear mind – obviously everyone is different so this might not be something that you’re considering. Some disadvantages of bringing it forward include less time to apply for finance or complete the property searches and enquiries and increased demand and processing on the banks creating potential delays because ‘everyone else’ also wants to settle before Christmas.

Pushing settlement back until after the New Year

The ‘delayed’ settlement doesn’t work for everyone, especially in many cases the seller who generally prefers a quicker sale. Settling after the New Year might also make the settlement more realistic, however for a buyer who still needs to process their due diligence or their loan application, the Christmas and New Year period can still be a period of delay. To enjoy the same effective business days compared to any other time of the year, it might be reasonable to basically write off 2-3 weeks between mid December to early January. Another issue that the parties (especially some buyers) should consider is that January marks a new adjustment period for many quarterly rates, but more importantly another tax year for land tax which could have further implications if the contract provides for a land tax adjustment. Also if you’re considering pushing the settlement back and depending on how far you want to push settlement back, be aware that stamp duty liability arises 3 months from the contract date.

Be aware, think ahead

I think with a little foresight, and if you didn’t already consider these issues hopefully this article now prompts you to think more carefully about it and you’ll be able to avoid any unwanted or unexpected consequences of buying or selling property around this time of year. If you’re still not sure of what this means for you, the other party or for your property transaction, then speak to your lawyer or conveyancer to get advice on what you can do and what you should do to avoid complications from entering into a contract with a completion date around Christmas or the New Year.