“A delayed settlement is not just inconvenient. For the party at fault, it can be expensive, and in serious cases it can cost them the contract entirely.” [cite: 54]
Settlement delays carry real financial and legal consequences for the party responsible. [cite: 55] The rules vary by state, but the core principle is consistent: the party causing the delay faces penalty interest on the outstanding purchase price, a formal notice requiring them to settle within a set period, and if they still fail, the risk of contract termination and deposit forfeiture. [cite: 56]
Penalty interest
Penalty interest is typically calculated at 9 to 12% per annum on the outstanding balance of the purchase price, charged daily from the agreed settlement date. [cite: 58] On a $900,000 property with a $90,000 deposit already paid, penalty interest at 10% per annum runs to approximately $225 per day on the unpaid $810,000. [cite: 59] Even a one-week delay adds up to over $1,500. [cite: 60]
Notice to complete
In most states, the non-defaulting party can issue a Notice to Complete, giving the defaulting party a further 14 days to settle. [cite: 62] If settlement still does not occur, the non-defaulting party may terminate the contract. [cite: 63]
State by state variation
- NSW and VIC: buyers can issue a Notice to Complete but cannot charge sellers penalty interest for seller-caused delays, though they can terminate. [cite: 65]
- QLD: both parties can refuse an extension and charge penalty interest. [cite: 66]
- WA: there is a three-day grace period before penalty interest applies, backdated to the original settlement date. [cite: 67]
- SA: the buyer may issue a written demand requiring rectification within three business days before penalty interest applies. [cite: 68]
Contract termination and deposit
If the defaulting party fails to settle after the Notice to Complete period, the other party can terminate the contract, retain the deposit, and sue for further damages including losses from re-selling at a lower price and legal and holding costs incurred during the delay. [cite: 70]
You may consider seeking independent advice from a licensed mortgage broker or financial professional to assess your personal circumstances. [cite: 71] This information is general in nature and does not take into account your objectives, financial situation or needs. [cite: 72] Delayed settlement consequences are governed by the contract terms and state-specific legislation. [cite: 73] Seek independent legal advice from a conveyancer or solicitor before taking any action. [cite: 74]
Sources: Entry Conveyancing, What Happens if Settlement is Delayed 2024; KDD Settlement Agents, Penalty Interest WA; [cite: 75] Pearson Chambers Conveyancing, Penalty Interest for Late Settlement 2026; CM Lawyers, Settlement Shambles 2025. [cite: 76]
