Both the Vendor and the Purchaser of a property are required to complete/settle the sale/purchase of property transaction in accordance with the contract.
In most contracts, completion is forty-two (42) days after the contract is entered into.
However, what happens if either party are unable to complete on time?
Notice to Complete
Contracts in NSW normally include provisions stating that if party A (that is, either the Vendor or the Purchaser) is unable to complete the contract on time, the party B can issue a ‘Notice to Complete’ to party A.
Purchaser unable to complete
In the event that the Purchaser is unable to complete the transaction within the specified timeframe, the Vendor may issue a Notice to Complete. A Notice to Complete will require the Purchaser to complete the transaction within fourteen (14) days from the date of the Notice to Complete.
The Vendor can extend the period of the Notice to Complete at its discretion.
Most contracts in NSW require the defaulting party (that is, the party that is unable to complete the contract) to pay interests and legal costs of the other party to compensate for the delay.
In the event that the Purchaser does not complete the transaction within the fourteen (14) days period, the Vendor is usually able to terminate the contract.
The Vendor after terminating the contract, may be entitled to the following:
- Retain the deposit paid by the Purchaser;
- Sue the Purchaser for any damages caused as a result of the termination;
- If the Vendor then sells the property, and the sale price is lower than the price in the terminated contract, the Vendor may sue the Purchaser for the difference in the sale price; and
- Other entitlements that the Vendor may have available.
How to issue a Notice to Complete
A Notice to Complete must be served in the appropriate form in order to comply with the relevant governing laws. A defective Notice to Complete, which is either defective in its form or substance, will not be enforceable against a purchaser.
The Notice to Complete must be served upon the Purchaser using the appropriate service method. A service by email may not be sufficient.
What to look out for
The Vendor may not be able to sue the Purchaser for a breach of the contract unless the Vendor issues to the Purchaser a Notice to Complete.
If you require any assistance with respect to a breach of contract, contract the writer for a consultation.