We are settling a day late on our very first purchase due to our lender’s incompetence. Our conveyancer, also the vendor’s conveyancer informed us today we will be charged penalty interest of 13%pa for every day the property settles late. My question is, does this have to be noted in our contract, as it is not or is it a standard legal event for late settlement?
We are in Victoria if that makes any difference.
Thanks for reading.
Mark.Your solicitor should be able to advise you how it should appear in your contract.
For every $100K the property costs you are up for $36.50. This is effectively halved as the 7% your lender charges pa is saved for that day.
Chalk it up to experience, send a letter to your bank manager asking them to pay (bet they don’t) . Just don’t lose sleep over it or get yourself all twisted up over it. Is a trifling amount compared to other costs in buying a peoperty.
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Simon Macks
Residential and Commercial Finance Broker
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I would imagine that would have to be in the contract for you to be charged. If not, how could they justify it?
Terryw
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Hi,
I dont know about other states contracts, but here in SA, a default clause is in every single contract. It is in the terms and conditions, which no one ever reads until something like this happens.
I quote for you:
‘If the purchaser breaches this agreement and as a result, the purchase of the property is not completed on the settlement date, or the price or any part of the price is not paid on its due date, the purchaser must pay interest on the full price (less the amount of any deposit monies paid) from the settlement date until either…’ blah blah and it goes on. Basically yes you have to pay interest until the money is paid.
This is a basic default clause, and i would be 99% certain it would be on all contracts in the country.
I have defaulted myself once due to an incompetent lender, and luckily, my vendor didnt charge me, but I would be going after the lender for the money. If its their fault, they should pay.
good luck, and read your terms and conditions on your contract!Thanks for the input guys.
The general consensus is we have to pay penalty interest and yes I’ll be contacting the lender telling them to pay up…..good luck there buddy!
I’m told it is payable even if it is not on the contract and is a matter of common law. I’ll keep an eye on it next time.
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