Quite often property contracts will stipulate a settlement date of 30 days from the contract date. This can be a tight time frame to adhere to and a buyer (or seller) may have difficulty in fulfilling this obligation.
Contracts in Queensland provide that time is of the essence. This means that the deadlines for the fulfilment of conditions must be adhered to strictly. If this does not happen then a party (we will use the buyer for the purposes of this article) will be in breach of the contract.
If a buyer is in breach of the contract then the seller may:-
• Affirm the contract and sue the buyer for damages and/or specific performance (i.e. compel the buyer to complete the contract); or
• Terminate the contract, keep the deposit and sue the buyer for damages
Until recently, if a buyer could not settle on a given day then the buyer would have to request an extension of time from the seller. The seller did not have to grant that extension and so the buyer was at the mercy of the seller.
The standard REIQ contract was changed recently following a situation where a young couple had their contract terminated and lost their deposit because their bank was unable to settle on the nominated settlement date. As a result of that change either party may extend the settlement date by up to 5 business days from the scheduled settlement date. This would have saved the young couple form going through the experience of having their contract terminated and losing their deposit.