Extending settlement date on a signed contract? (vendors request)

[dynamite]

My vendor wants to extend date of settlement on the property by another month (total 100 days, current 70 days) because they are unable to find a new home. I am finding this very annoying.

Do I morally agree to it because they have not found a home yet (only after 10 days)?

Do I have to sign a new contract, or can the old one be changed? (finance and B&P date has not yet been reached)

Can they try and change price etc if we do agree to change settlement date?

I have been working my butt off to work around the current date set, and its not financially in my best interest to change the date, unless I dont have to sign a new contract.

 

[Brojac]

Dyno - o - mite! (remember JJ?)

First of all see your solicitor!

I will share with you my knowledge of your situation.

It sound like your buying so here goes.
No you do not have to extent the contract but if the contract (as mentioned) is not conditional yet wait untill it is. (if your selling do not do anything untill the contract is unconditional or they might pull out on finance).

You can charge them rent if they want to extend get the agent to give you a figure p/W then deduct this amount from the contract or via bank cheque at settlement would be better. I have done this before. If they dont like it Tuff move out then.

Price cannot be change unless all parties agree. But, if your being nice to extend the contact rent again is not out of the question.

Money and concious sometime do not go together!

You have the power use it as you will!

Good luck

Brojac

 

[sbe]

Usually it's worked out between the conveyancers. You do have to agree to it of course.

Why dont you spin this to your advantage?

Settlement date stays the same, and they can begin renting it from you at $x per week? Bingo - Instant Tenant. They no longer have mortgage payments (if they had them), you get income etc. Maybe even agree to cheaper rent if you want to do works around the place (providing of course renno's dont require empty house)

Otherwise, you may want to negotiate some "compensation" for delayed settlement. I wouldn't be raising the price (which could work to your advantage).

Good luck.

Simon.

 

[strangep]

Hi dynamite

We were in a similar situation a couple of weeks ago except our contract had gone unconditional. All the negotiations regarding extensions to the proposed settlement date were done through the conveyancers.

Asking them to pay rent for the period of the extension is a good idea. Another option but probably not as lucrative for you would be to ask them to pay something towards (or all) your legal fees. (this option suggested to us by DaleGG)

Good luck

Paul

 

[Sunstone]

Dear Dynamite,

Agree with SBE's good suggestion.

On one of ours we had the previous owner want to rent the property whilst he fixed his move. Originally he wanted an unrealistic rental and so I referred him to the realestate agent for the true market appraisal.

End result good tenant. Six month agreement. No vacancy, market rent.

Harder to control how clean the property is at the end but make sure that you put in a clause to ensure this is cleaned "Cleaned subject to the satisfaction of _____ property manager."

Remember different property managers have different standards of cleanliness and if you are not careful this can affect your back pocket.

Cheers,

Sunstone.

 

[dynamite]

Yep, renting was my original thoughts, only not sure if these people will say no to renting it from me, in which case I don't think I am morally obligated to offer anything else(Im not gonna lose money).

If the date has to be changed by the lawyers that will cost money, and Im not paying more.

I reckon market value rent is fair, any thoughts?

 

[Miss V]

Also, not sure if this is correct, but if you need to do any repairs, they will be deductable since the property was rented, and not capital expenses?

v

 

[swordfish]

Hi Dynamite,

We were in exactly the same situation about 15 days ago.
We had signed the contracts with 42 days settlement period.
One day prior to settlement date, the Vendors advised that they were not ready to settle - no reasons given.

We were obviously very disapointed, but then we spoke to our Solicitors. The Vendors were issued a "notice to complete" - where there were given 14 days to settle. Failing that, we had the option to resind the contract and sue them for any loss.

They settlement went through yesterday - on the 14th day. This is a ploy used a lot in NSW this days in order to avoid paying rentals.

You unfortunately cannot begin to charge rental until the ownership is passed to you and this can only be from settlement day.

 

[dynamite]

Well the B&P has come back all good. But whilst there, the vendors started going on about how they havnt found a house yet, and that they are going to be homeless.

What to do?

 

[Sunstone]

Dear Dynamite,

At the end of the day this is a business. To charge anything other than market rent is to throw money away.

You are helping them by purchasing the property and being generous by considering renting the property to them. Offer to give them a rental agreement for 6 months instead of your normal 12 months. That will give them PLENTY of time to find somewhere else to live without any pressure for them to buy quickly. If they want to end it early then the cost to them will be the rent until the end of the agreement.

Why 6 months? You need time to be able to advertise the property so that you don't have any vacancy. If they only rent for one or two months it is a pain in the neck for you. You have a strong position and I whilst you want to maintain a good relationship you need to clearly state your business requirements.

Six month agreement or vacant position? If not then they should be very creative on providing some compensation to you for the inconvenience to your business.

Cheers,

Sunstone.

 

[Peter Noake]

I'd definately offer them a rental period. Market rent or slightly below on a monthly basis.

I am about to settle on a property in Queensland where this was actually specified as a contractual condition.

"The Vendors will lease the property back from the Purchaser at $xxx per week on a monthly basis for a term suitable to the Vendors."

I got a good tenant at market rent, and a minimum of 1 month to relet the property when they wanted to move on, and they got a house for a long as they needed to relocate. Win-win.

This is a business transaction. Treat it as such. And remember, the best outcomes when negotiating are those when both parties win.

Pete

 

[Aceyducey]

Originally posted by swordfish
They settlement went through yesterday - on the 14th day. This is a ploy used a lot in NSW this days in order to avoid paying rentals.

You unfortunately cannot begin to charge rental until the ownership is passed to you and this can only be from settlement day.

But it is an easy situation to resolve.

Ensure all your contracts include payments as a % of the property price to be paid to you for every day late the settlement is.

Normally there is a seven day grace on settlements, so you would be paid 'rent' for the period after that.

Of course many vendors like to make this mutual, but that's not a problem if you've got everything lined up properly

Cheers,

Aceyducey