When it comes to real estate transactions in New South Wales, a deal is a deal and time is money. That is why contracts usually include stipulations pertaining to a Notice to Complete. But what does that mean? Keep reading to find out.
As a rule, parties engaged in the purchase or sale of property must abide by terms set forth in applicable contracts. Among them are stipulations pertaining to settlement or completion. The deadline for settlement or completion is called the settlement or completion date.
Notice to Complete provisions serve as an incentive for participants to meet this deadline. Basically these provisions state that failure to settle or complete the contract on the specified date will result in the issuance of a Notice to Complete.
Many contracts also include special provisions pertaining to the Notice to Complete. These provisions specify the terms and the consequences of issuance. They also specify the manner in which the notice must be served.
Either party can issue a Notice to Complete
Failure to complete or settle a contract by the specified deadline is sometimes — but not always indicative of bad faith. In fact, there are plenty of valid reasons why a buyer or seller cannot fulfil this contractual obligation. For example, there may be bank delays or the purchase funds may not be available. In some cases, the property is still partially occupied.
Therefore, a Notice to Complete extends the deadline for settlement completion by 14 days. This provides a date certain for the party that is ready to settle. It also provides additional incentive for the party that is not yet ready to get everything in order.
The party that issues the Notice should not do so unless he or she is prepared to proceed with settlement. The party that issues the Notice should also be sure to do so in the manner specified in applicable contract provisions. It is important to note, however, that these provisions may vary in each matter.
Options and consequences for buyers and sellers
If you are a seller who has issued a Notice to Complete on a buyer, you have certain options at the end of the additional 14-day period. You can either extend the Notice to Complete period again or terminate the Contract. If you choose the latter, you are legally entitled to keep the buyer’s deposit. You may also be able to sue for any financial loss/damages incurred because the buyer defaulted on the contract. You can then put the property back on the market.
If you are a buyer who has issued a Notice to Complete on a seller you also have certain options upon conclusion of the 14-day extension. Specifically, you have the right to:
- terminate the contract
- get your deposit back (or get a refund)
- sue for any relevant financial loss/damages you may have sustained
- walk away from the matter
That being stated, there is an important caveat for buyers. Even if you issue a notice to complete you cannot extend the 14-day deadline without the seller’s cooperation. A mutual agreement to settle reached after the 14-day period elapses constitutes abandonment of the notice. In that case, the settlement may proceed by agreement.
Another option for buyers
There is another way to compel a seller to complete the transaction As a buyer, you may pursue court intervention in lieu of issuing a Notice to Complete. Specifically, you could seek Court Orders for Specific Performance of the contract. If the court grants such orders, the seller must complete the contract. He or she must also surrender possession of the property in question.
Even in the midst of the COVID-19 pandemic, property transactions are still going through. In these unprecedented times it is even more important that parties engaged in these deals understand their legal rights and obligations. These include legal rights and obligations pertaining to Notices to Complete.
If you are buying or selling property in these tumultuous times, we are here to provide the legal advice and advocacy you need. We are happy to answer questions or address concerns about Notices to Complete or any related matters. Simply phone our office or contact us online to arrange an appointment at your convenience.