Time Is Still of the Essence - Sort Of
Extending Settlements of Contracts under Clause 6.2 of the Version 17 new Sales Contract.
In Queensland to this writer’s knowledge and 40 years of experience “Time has been of the essence” in a real estate contract always in other words settlement day is settlement day, unconditional day is unconditional day and failure to perform gives Sellers the right to terminate and take deposits.
The new contract gives the Seller and the Buyer each the right to extend the contract for up to 5 working days without penalty. This is similar to the situation in New South Wales where settlement notices are required to make time of the essence. The party receiving an Extension Notice has no right to dispute it. Don’t think you will avoid this with Units, that contract has also been changed.
Extensions can be sought anytime up to 4 PM on the Settlement Date. A party wishing to extend can give notices successively on the new settlement Date under the new clause nominating one or more new dates which add up to no more than five business days after the original scheduled settlement date. This is called an Extension Notice.
Parties can give more than one extension notice but may not seek extensions under this clause for a date later than five business days as outlined above. The notice must be given in accordance with 10.4 of the contract.
From a practical point of view now that this is available banks may well take it as an easy way out instead of working at settling on the due date they may tell their client to obtain an extension.
Although the new arrangement offers some immediate benefits for the person being delayed it is going to create problems for the person who is forced to stay in the house they were packed and ready to leave or worse still had moved out of by 4 PM on the settlement date or, if the notice is given by a seller and the buyer had given notice on rented premises and was finding themselves being served with urgent eviction notices and new tenants moving in the next day..
No doubt we will get used to the new arrangements but there will be difficulties until the kinks are ironed out.
Agents are unlikely to get involved in this aspect of the conveyance, it seems likely that it will be handled by the lawyers. Wherever First National can ease the pain giving beforehand heads ups et cetera we will be doing so.
by David Hamilton
Director, First National Palm Beach | 0419 763 924
palmbeachfn.com.au February 2021
First National Palm Beach
Ph: 07 5559 9600
