What Happens If the Purchaser Doesn’t Settle on Time in Victoria?

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When Is a Purchaser Considered to Be in Default?

Under the standard Law Institute of Victoria (LIV) contract, time is of the essence. If the purchaser is not ready, willing, and able to complete settlement on the agreed date, they are immediately in default—regardless of the reason.

This default triggers the vendor’s rights to issue notices and claim financial remedies.

Common Causes of Purchaser Default

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

  • Lender not ready or delays in loan document execution

  • Failure to complete verification of identity (VOI)

  • Last-minute valuation or compliance issues

  • Buyer confusion about settlement procedures

  • Poor communication between broker, lender, and purchaser

These delays may be understandable—but they do not excuse non-performance under a binding contract.

What Can the Vendor Do If the Purchaser Doesn’t Settle?

The vendor may take the following steps under the LIV contract:

1. Issue a Notice of Default

  • A formal, written notice giving the purchaser 14 days to complete settlement.

  • Must be properly served in accordance with contract terms.

  • Clearly states the failure to settle and the consequences if not remedied.

2. Charge Penalty Interest

  • From the due date for settlement, the vendor is entitled to charge penalty interest at 12% per annum.

  • This is calculated daily on the unpaid balance of the purchase price.

  • Interest continues to accrue until the earlier of settlement or rescission.

  • This is a contractual right and is enforceable without needing to prove actual loss.

3. Rescind the Contract

  • If settlement still hasn’t occurred after the 14-day period, the vendor may formally rescind (cancel) the contract.

  • Upon rescission:

    • The deposit is typically forfeited to the vendor

    • The vendor may re-sell the property

    • The purchaser may be sued for any shortfall or consequential loss

Can the Vendor Re-Sell the Property?

Yes. Once the contract is properly rescinded:

  • The vendor may immediately re-list the property

  • If the resale price is lower, the vendor can recover the difference plus:

    • Additional advertising and marketing costs

    • Holding costs (interest, rates, insurance)

    • Legal costs associated with the breach

These rights are enforceable under General Condition 28 and are well established in Victorian conveyancing practice.

Legal Requirements for Notices

Notices of default and rescission:

  • Must be in writing and issued by the vendor or their legal representative

  • Must be properly served—by email, post, DX, or personal delivery

  • Must comply strictly with the contract requirements to be valid

Poorly drafted or improperly served notices can delay your rights or result in a waiver.

David Dawn’s Professional Advice to Vendors

“When a purchaser doesn’t settle, time is critical. We act immediately to issue a default notice, calculate the 12% penalty interest, and ensure you are in the strongest legal position to rescind and recover losses if required.”

At Victorian Property Settlements, we:

  • Monitor settlement readiness closely

  • Draft and serve compliant notices of default and rescission

  • Calculate penalty interest to the day

  • Liaise with agents to coordinate re-listing if needed

Final Thoughts

Purchaser default is disruptive—but not uncommon. Victorian vendors are well protected under the LIV contract. With experienced conveyancing, you can enforce your rights, recover costs, and move forward with a new buyer if necessary.

Acting for the Vendor in a Default Situation?

Victorian Property Settlements – Trusted by vendors for over 25 years.
📍 Frankston | 📞 03 9783 0111 | ✉️ david@quick32.com
🌐 www.victorianpropertysettlements.com.au