Help: Massive penalty for late settlement

Hi All

I was wondering if someone can help me or give me an advice as i almost suffered a heart attack today.I signed up for a block of land end of last year and was told that settlement is due sometime in September. I paid the deposit and knew loan approval won't be a problem so i kind of waited for vendor (government org) to contact me and when they contacted me, i was given 15 days. I contacted me conveyancer straight away and asked him to get the docs ready. In the mean time applied for a loan and received approval within 15 days. Somehow the documents by Perpetual were sent to wrong adddress and i kept waiting and finally we signed up everything in about 3 weeks time. Perpetual contacted my coneyancer who again didn't repond for more than 2 weeks and further delays occured.

End result is that i have been told today that i will need to pay $5000 in interest penalties at the rate of 15% as the delay was for 65 days. I had absolutely no idea how interest is charged and how long should it take for my coneyancer to prepare these documents etc etc.

I think it's totally totally unfair as $5000 penalty will totally ruin everything for me as the settlement could be further delayed so i can arrange etc $5000 and i can end up even losing deposit of $21000.

My penalty comes up to around $77.00/day and i have proof that Perpetaul sent documents to wrong address. I didn't even know those documents were sent to me and we lost 2 weeks in this. Can i ask for a refund of $1000??
Additionally my coneyancer didn't respond to document requests for upto 2 weeks, can i ask him to pay penalty then???

Can someone please please help :(:(:(:(
 
Without precise details it is a bit hard but it would seem that your conveyancer has been very slack.

I hope you have a record of when each event happened and you should take it up with your conveyancer for compensation.

You could talk to your govt fair trading dept for advice.

You might also get told that you were less than efficient yourself, when money is involved it is always best to stay on top of things and hustle and bustle people to hurry up and do it

"the squeaky gate gets the oil"

Hard way to learn I know but I am sure in future you will be like all experienced RE folk, chase and chase until it is done.
 
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I can't help with the legalities but i would be questioning why your Conveyancer never informed you of your interest charges....every time we've been late or have any inkling that we won't be making settlement, our Conveyancer tells us straight away.

I would have assumed the Vendors Conveyancer would have mentioned something as well....

Was any of this (interest charges) documented on paper anywhere? If not i would have thought you'd have a good reason not to pay up.

Hope someone else can help you out a bit more with this one sorry!
 
Firstly, you are probably lucky they didn't terminate your contract and keep your deposit.

Then have a look at your contract and see what is says about penalty interest. You should have chased the loan documents earlier and you should also ask your conveyancer what their delay was for.

You may also be about to negotiate your way out of it. Best to go and find a solicitor now I think.
 
Was this an off the plan purchase? For such purchases the vendor only gives the purchaser 14 days to settlement from completion.... As terry said you are lucky not to have lost the entire 10%. I would be pushing on the conveyancer if I were you to get some compensation.
 
And it wasn't a good idea to accept a 14 day settlement either. This should have been negotiated out to 21 or 28 days. Very hard to get bank approval and settle within this time frame.

Did you get advised on this when entering the contract?
 
Thanks for the reply guys, i can understand that i shouldn't have waited for vendor to contact for settlement but you can understand that i have absolutely no experience in this. I didn't know how long it should take for bank to send documents, didn't know they had sent them to wrong address, didn't know how long should coneyancer take.
 
And it wasn't a good idea to accept a 14 day settlement either. This should have been negotiated out to 21 or 28 days. Very hard to get bank approval and settle within this time frame.

Did you get advised on this when entering the contract?

Terry I don't think I've ever seen an OTP contract with settlement longer than 14 days from the date the certificate of occupancy is provided by the Council.

However, usually developers inform the purchasers long before that step is completed so that their finance is all ready to settle. It's not really in the best interests of the developers to have almost all purchasers default (even if they keep the 10%).
 
Thanks for the reply guys, i can understand that i shouldn't have waited for vendor to contact for settlement but you can understand that i have absolutely no experience in this. I didn't know how long it should take for bank to send documents, didn't know they had sent them to wrong address, didn't know how long should coneyancer take.

Assuming you have clean credit, PAYG wage etc it can be settled in 14 days. But it's so difficult because there's so many things that can go wrong or delay any loan application...I would never guarantee you could get approval in that time.
 
And it wasn't a good idea to accept a 14 day settlement either. This should have been negotiated out to 21 or 28 days. Very hard to get bank approval and settle within this time frame.

Did you get advised on this when entering the contract?

I didn't take any advice on number of days and as you said, it's quite impossible to settle within 14 days. I know vendor will use "terms and conditions" thing so i may not be able to do anything but i think it's highly unfair given the fact that someone is trying to buy their first property with absolutely no knowledge.

Can someone reccomend a lawyer in melbourne who i can contact because i am EXTREMELY upset.
 
You will probably have no recourse to the developer/vendor - it is not their fault that Perpetual and your conveyancer stuffed up. Penalty interest rate of 15% is standard - but don't get too upset. On my purchase of over $4m I was late by 3 weeks @ 15% interest - so you can imagine how much that one hurt! I would be speaking to your conveyancer about getting compensation for the trouble he has caused you. He really should have known better.
 
Thanks the Y-man.

It's biggest lesson i have learnt all year, wouldn't ever use coveyancer in my life.
Too bad the learning comes at the expense of my Christmas, new year, holiday plans being ruined.
 
You will probably have no recourse to the developer/vendor - it is not their fault that Perpetual and your conveyancer stuffed up. Penalty interest rate of 15% is standard - but don't get too upset. On my purchase of over $4m I was late by 3 weeks @ 15% interest - so you can imagine how much that one hurt! I would be speaking to your conveyancer about getting compensation for the trouble he has caused you. He really should have known better.

I understand Aaron but my case is way different, $5000 for me is almost like $500,000 for you.
 
I understand Aaron but my case is way different, $5000 for me is almost like $500,000 for you.

Yes of course it's not nice at all. Just try to learn from it...as a silver lining that $5,000 or so in penalty interest can be added to the capital base of your property so you don't pay so much tax when you sell (if it's an IP). Just keep that in mind.
 
Thanks the Y-man.

It's biggest lesson i have learnt all year, wouldn't ever use coveyancer in my life.
Too bad the learning comes at the expense of my Christmas, new year, holiday plans being ruined.

the biggest lesson should not be solicitor > conveyancer

it should be that you need to be more on the ball and not leave your money and responsibilities in other peoples hands. that is a significantly more important lesson than solicitor > conveyancer

it might not be easy but you need to remove the emotion here and act in your best interest. yes it sounds like mistakes have been made by your conveyancer but it also sounds like youve made a number of mistakes. a lot of people do silly things with property purchases and get away with it, unfortunately you didnt.

not trying to sound harsh at all, i do feel for you but it is important you work out exactly what all parties did wrong (including yourself) so that it doesnt happen again. to me that is more important than getting compensation although i certainly would be chasing that up as well. we received our penalty interest back from either AMP or Citibank a few years ago when they stuffed around with a sale and the buyer hit us with interest so there is hope for you.
 
No use crying over spilt milk. Everyone makes mistakes, especially early on. I made heaps.

Just learn from the experience (and see if you can get out of it, or reduce it). I bet the next time you buy you will be on the ball.

14 days may be usual, but there is no reason to agree to this. But it seems you did, perhaps not knowing or understanding what was in the contract. I had previously bought over 20 properties and never once read a contract. You really must go through and read the whole thing, maybe twice. Don't leave it up to your lawyer, as he may not think 14 is unreasonable.

However, even if you had your loan approved it would take a few days for the lender to get the documents prepared and out to you, another day to sign, another day to return and then the lenders want 10 days to process the docs and book in settlement. If you had to have a valuation done too, then this could add another week. Plus the lender would have needed further documents and update payslips etc. All this makes it very unlikely you could have settled within the 14 days - which is just 10 business days.
 
Thanks for the reply guys, i can understand that i shouldn't have waited for vendor to contact for settlement but you can understand that i have absolutely no experience in this. I didn't know how long it should take for bank to send documents, didn't know they had sent them to wrong address, didn't know how long should coneyancer take.

Unfortunately ignorance is not defence. I agree that it was harsh for you, but fair from the vendors point of view.

Good luck with getting compensation out of the bank. What address did they have and how did they get it? They usually only send to the address on file.

Did you ask the conveyancer why he was late? Perhaps he had to wait for essential documents to be sent from government departments or bank.

There are great advantages to using a competent conveyancer and mortgage broker ... and keep asking every day when the timeline is so tight.
 
Your conveyancer definitely messed something up by taking 2 weeks to get back to you.

Getting finance organised in 2 weeks is a small miracle. When someone comes to me for finance the day after getting a completion notice from the developer I tell them to expect penalty interest.

It would be worth investigating why the documents were sent to the wrong address. It is possible to get compensation from lender but you've got to have a reasonably compelling case that they were at fault.
 
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