Can I Delay Settlement If My Bank Isn’t Ready? Your Options in Victoria

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When the Bank Isn’t Ready, Who’s Liable?

Under the standard Law Institute of Victoria (LIV) contract, time is of the essence. This means:

  • The purchaser must be ready to settle on the agreed date

  • If not, the vendor can issue a Notice of Default and charge penalty interest

The bank’s delay doesn’t excuse the purchaser from contractual obligations. The responsibility to ensure finance is ready rests with the purchaser.

Why Banks Are Commonly Late

At Victorian Property Settlements, we’ve seen an increasing number of delayed settlements due to:

  • Discharge authorities not being lodged early enough

  • Missing signatures on loan documents

  • Last-minute valuation issues

  • Internal bank delays in final approval or verification

  • Poor communication between broker, lender, and settlement agent

These delays are especially risky in short-settlement or Friday contracts.

What Are Your Options If Your Bank Isn’t Ready?

🔹 1. Request a Short Extension

If the delay is minor, your conveyancer may seek a 1–3 day extension. Vendors don’t have to agree—but many do, especially if communicated early.

🔹 2. Negotiate a Licence to Occupy

If your loan is delayed but you’ve sold your current home, you may seek access via a licence agreement (e.g. to move in while settlement is pending).

🔹 3. Prepare to Pay Penalty Interest

If no extension is granted, you may have to settle late and pay 10% p.a. penalty interest on the unpaid balance for each day of delay.

Can the Vendor Cancel the Contract?

Yes, but only after a valid Notice of Default has been served and the 14-day period has expired.

Most vendors prefer to settle late with penalty interest rather than re-list the property.

David Dawn’s Advice to Purchasers

“Never assume your broker or bank is on track. We’ve seen settlements fall over because of one missing signature or a misfiled document. If in doubt—call your lender, not just your broker.”

We work closely with your broker and lender to:

  • Confirm booking in the PEXA workspace

  • Push for loan documents and VOI completion

  • Alert all parties if delays become critical

How to Prevent It in Future

  • Lodge discharge requests at least 21 days prior

  • Complete VOI and document signing early

  • Avoid Friday settlements

  • Book settlement for 2 weeks after “finance due” date

And—always use an experienced conveyancer who’ll push lenders and keep agents informed.

Final Thoughts

Bank delays don’t excuse your obligations—but with early warning and good conveyancing, disaster can often be avoided. Always notify us immediately if your broker raises any red flags.

Need Help Managing a Lender Delay?

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