Hi all,
I have recently bought an appartment in Victoria. The agreed settlement date with the vendor is 14th July 2009 or next Tuesday.
I have already paid 5% of the purchase price money to the vendor. I have taken a loan from Westpac with 90% of the purchase price.
The remaining 5% of the balance was to be paid on settlement which is next Tuesday.On Friday, I made a bank cheque with Commonwealth and ANZ account to get the money transferred to my westpac account.
Now these cheques will be cleared by Wednesday morning. As I understand, the settlement is on Tuesday which will be at risk.
I have already escalated this with Westpac and would try to get the amount credited to my Westpac by Tuesday. I have few questions regarding this
1) If I change the settlement day from Tuesday to Wednesday ? Will I incur a penalty ? If yes, then how much.
Please suggest as what will be better in this situation. Would appreciate your prompt response.
Thanks
A few thoughts:
Speak to your conveyancer first thing on Monday and advise them of the situation.
From my understanding, if you have presented a bank cheque it should clear straight away, but I might be wrong.
There is normally a penalty clause in the contract which outlines a rate of interest you pay if you don't settle in time. This is normally about 10% per annum and is calculated daily. So if the property purchase price, for example, is $100,000 and you have already paid $5,000 deposit, then you would pay 10% of $95,000 divided by 365 (as you are only one day late.) This amounts to $26.00. From my understanding you only pay this is the solicitor from the other side decides to pursue it and this is rare with such a small amount. Even at a million dollar purchase you are still talking only $260 for one day.
I definitely suggest to speak to your conveyancer, as they will have information and figures specific to your circumstances. It is their job to handle this. Make them work for what you are paying them for.
Cheers
RP2606Hi RP2606,
Thanks for the advice. I have checked my westpac account and see the balance is there but for some reason it's not available. The funds will be available on Wednesday as it requires 3 days of clearance.
I have lodged and escalated with Westpac to get it by Tuesday so hoping for a positive outcome. As you suggested, I will ring the Solicitor to ask for their advice and penalty.
I did see a document from WA govt website where it is mentioned if there is a delay of 3 days in the settlement. Then there will be no penalty. Do you anything about that.
Thanks again for your general advice.
Cheers
AbhishekDon't worry too much. It is just a delay of 1 day. Penalty interest is around 10 to 15% pa – but you will only be charged, if at all, the day's interest. So if it is a $500,000 purchase, 10% is $50,000. divide this by 365 = $136.
But also remember since your loan will be settling one day later you will be saving interest there too. eg. $400,000 at 5% = $20,000. daily rate is $55.
Net cost $81 per day.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry. Your post explanation is an ace.
hey abhargav,
There is a 3 day leniency in WA.I was late by 3 days on my settlement 5 months ago but as it was in the 3 day "leniancy" period there was no panalty. The agent and vendor were very understanding and had no problems with the 3 day delay in settlement
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