What Is a Failed or Delayed Settlement?

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In Victoria, the contract of sale will specify a fixed settlement date. Time is of the essence unless varied by agreement.

A settlement is deemed to have failed if:

  • The purchaser cannot provide funds (e.g. lender not ready)

  • The vendor is unable to provide clear title or vacant possession

  • Any party fails to meet their obligations in the PEXA workspace

If not resolved, the innocent party may issue formal notice and seek penalties or even terminate the contract.

Common Reasons Settlements Fail

At Victorian Property Settlements, we frequently see delays caused by:

  • Lender not ready or documents unsigned

  • Final inspections revealing major issues

  • Caveats, mortgages, or other encumbrances not dealt with

  • Vendor failing to vacate or provide keys

Fridays are particularly risky due to PEXA congestion, reduced banking hours, and no buffer before the weekend.

📘 Read our full article on why you should avoid Friday settlements:
👉 www.victorianpropertysettlements.com.au/news/2025/4/24/why-you-should-not-book-a-settlement-on-a-friday

What Are Your Rights if the Other Side Fails to Settle?

🔹 For the Vendor:

  • Issue a Notice of Default giving the purchaser 14 days to settle

  • Charge penalty interest as per the contract (commonly 10% p.a.)

  • Ultimately rescind the contract and retain the deposit

🔹 For the Purchaser:

  • Withhold settlement if clear title or vacant possession is not available

  • Refuse to complete until adjustments or repairs are made

  • Request a licence to occupy (with agreed terms) if ready to move in but settlement is delayed

What Happens to the Deposit?

The deposit remains in trust and cannot be released to either party unless:

  • Both parties agree, or

  • A court or VCAT orders otherwise

If the purchaser is in default and the vendor rescinds, the deposit is typically forfeited.

Can the Parties Renegotiate?

Yes—but only by mutual agreement. You may:

  • Extend the settlement date

  • Enter a short-term licence agreement (e.g. to allow purchaser access or vendor to remain temporarily)

  • Amend financial or adjustment terms to facilitate a delayed settlement

These changes should always be formalised through your conveyancer and updated in PEXA.

How We Help Clients Through This

As explained by David Dawn, Licensed Conveyancer at Victorian Property Settlements:

“A failed settlement doesn’t have to mean disaster—but you must act quickly, follow the contract, and understand your leverage. We guide our clients through the steps so they don’t make costly errors in panic.”

Our services include:

  • Drafting default notices

  • Calculating penalty interest

  • Negotiating access licences

  • Ensuring compliance with PEXA protocols and notices

Final Thoughts

Failed or delayed settlements are more common than most realise—but they’re not the end of the road. With the right advice, most can be resolved within days.

Dealing With a Delayed Settlement?

Victorian Property Settlements – Trusted for over 25 years by Victorian buyers and sellers.
📍 Based in Frankston, serving all of Victoria
📞 03 9783 0111 | ✉️ david@quick32.com
🌐 www.victorianpropertysettlements.com.au