What happens if the buyer does not settle on time

Why a missed date is not the end of the contract

The standard form contract sets a date for completion, which is the settlement date. It is often 42 days after the contract date.

The law treats that date as not essential unless the contract says otherwise. Time is not essential for completion under the 2022 standard form contract.

So a short delay, on its own, does not let the seller walk away.

Time must first be made essential. The usual way to do that is a notice to complete.

What a notice to complete is

A notice to complete is a written notice from one party to the other. It says the other party is late and sets a new date to settle.

For the notice to be valid, three things must be true.

1. The buyer must be in breach, or guilty of unreasonable delay.
2. The seller must not be in breach, and must be ready, willing and able to settle.
3. The notice must give a reasonable time to settle.

14 days is generally treated as the minimum reasonable time. A shorter period needs strong circumstances. A notice giving only 13 clear days has been held invalid.

Many contracts include a special condition setting the notice period, often 14 days. Read your contract's special conditions.

Step by step for a seller

1. The settlement date passes and the buyer does not settle.
2. We check that you are ready, willing and able to settle and are not in breach yourself.
3. We check the special conditions for any notice period, interest or fee the buyer must pay for late settlement.
4. We serve a notice to complete on the buyer's solicitor or conveyancer.
5. If the buyer settles within the notice period, the sale is completed. Any late interest or fee under the contract is claimed at settlement.
6. If the buyer does not settle by the new date, you may be entitled to end the contract. We advise you before any notice of termination is served.

What the seller can do after ending the contract

The standard form contract gives the seller remedies when the buyer fails to settle in an essential respect. In general terms, the seller may:

1. End the contract by serving a notice.
2. Keep or recover the deposit, up to 10% of the price.
3. Resell the property and claim any shortfall, if the resale happens within the period the contract allows.
4. Claim damages for loss.

The exact terms differ between editions of the contract and its special conditions. We read your contract before you take any step.

Interest and fees for late settlement

The standard printed conditions do not set late interest on their own.

Many contracts add special conditions that require a buyer who settles late to pay interest on the unpaid balance, or a fixed fee for a notice to complete or a rescheduled settlement.

These amounts are only payable if the contract says so. Check the special conditions before exchange.

Where sellers get caught

Where sellers get caught

Serving a notice while not ready to settle.

A seller who is in breach, or not ready, willing and able to settle, cannot serve a valid notice.

Giving too little time.

Less than 14 days is generally too short. An invalid notice cannot support termination.

Ending the contract too early.

Ending the contract without a right to do so can itself be a breach. Take advice before you serve any notice of termination.

Buying your next home on the same day.

If your buyer is late, you may not have the money to settle your own purchase. Build time between the two dates where you can.

No late interest clause.

If the contract has no special condition for late interest or fees, they may not be payable. Have your solicitor include one before the contract goes to the agent.

Common questions