Every day before settlement narrows the options.
Written for: Business owners, property investors and developers
It usually happens late. Contracts exchanged, deposit paid, settlement date set, and then the finance falls over. A valuation comes in short, a lender changes its policy, a condition can't be met, or the formal sign-off simply doesn't arrive in time.
The settlement date doesn't move because the finance did.
The detail depends on the state or territory, the form of contract and its specific terms, and the buyer's lawyer or conveyancer is the person who advises on those. But the general shape is similar across Australia.
Late settlement. Many contracts allow settlement to happen after the due date, with the buyer paying penalty interest on the balance for each day of delay, and sometimes the seller's costs as well.
A notice to complete. If settlement doesn't happen on the due date, the seller can usually serve a notice to complete. It sets a new deadline, often a short one, and makes that date essential.
Termination and the deposit. If the buyer still can't settle by that deadline, the seller may be able to end the contract, keep the deposit and, in some cases, pursue the buyer for further losses, such as a shortfall if the property resells for less.
For a commercial buyer the stakes often go further than the deposit: a site that took years to find, a tenant waiting to move in, or a business plan built around the property.
The notice to complete comes out of an old tension in the law. The common law treated a contract date strictly. The courts of equity, which could order a sale of land to go ahead, historically took a softer line: a buyer who was a little late could often still insist on the deal, because time wasn't treated as "of the essence" unless the contract or the circumstances made it so.
The notice to complete is the tool that closes that gap. Served properly, it makes time essential. From that point the deadline is no longer something to negotiate around. It's the line.
That's why a notice changes the conversation. Before it, a delay is a cost. After it, a delay can be the end of the contract.
When the original finance falls through, the question becomes whether other funding can be in place before the deadline. That gap is what short-term private lending is built for.
Private lenders can often move in days rather than weeks, because their assessment centres on the property and the exit rather than a lengthy serviceability process. The options usually look something like this:
None of this is guaranteed. The lender still needs acceptable security, a credible way out of the loan and enough time to do its work, including a valuation and legal documents. How lenders look at that last part is covered in Exit strategies explained.
Short-term funding costs more than bank finance. The comparison that usually matters isn't private money against bank money. It's the cost of the loan against the cost of not settling. That judgement depends on the deal, and the buyer's accountant or financial adviser is the right person to advise on it.
The biggest single factor in whether a settlement can be rescued is how much time is left when the search for new funding starts.
With a few weeks in hand, there may be several lenders and structures to choose from. With a few days, the field narrows to lenders who can value, document and settle quickly, on security that's straightforward. With a few hours, there may be little left to do but ask the seller for more time.
Most failed settlements don't fail on the day. They fail on the day someone decided to wait and see.
The warning signs are usually visible early: a valuation that came back low, a lender adding conditions, a sign-off date that keeps slipping. Buyers who act on the first sign tend to have more options than buyers who wait for the final no. Sellers are also often more open to a short extension agreed before the due date than to one requested after a notice has been served, and that's a conversation for the buyer's lawyer or conveyancer.
We work with more than 70 private and non-bank lenders and stay across what they're funding right now, including which of them can move quickly on a settlement deadline. If your scenario fits, we can connect you with the lenders it suits, in the right order. The lender assesses the deal and makes the credit decision.
We aim to be in touch within the hour. Once we have what we need, you'll usually know within 24 hours whether there's a credible funding pathway, and if there isn't, why. When a settlement date is close, that time matters. You can also see what our lenders are funding right now.
We work on commercial and business-purpose loans only. Where a bank is the better fit, or if you need a home loan, personal loan or any other consumer loan, we'll put you in touch with one of our trusted brokers.
This article is general information only. It isn't financial, credit or legal advice and doesn't take into account anyone's particular circumstances. Lending decisions are made by the lender.
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