Key takeaways
- •Under the standard New South Wales contract for the sale of land, missing the completion date does not end the contract. A notice to complete sets a new date, and if you miss it, the vendor can terminate.
- •How long a notice to complete gives you depends on your contract. Where the contract does not fix a period, the notice must allow a reasonable time, and in New South Wales 14 days is commonly treated as reasonable.
- •If the vendor terminates after a notice to complete expires, the standard New South Wales contract lets the vendor keep or recover your deposit up to 10% of the price, and sue for the resale shortfall or for damages.
- •Any interest for late settlement and any fixed fee towards the vendor's legal costs of issuing a notice to complete come from the special conditions in your contract, not the printed New South Wales contract, so ask your solicitor for a settlement figure.
- •A short-term private loan from Secured Lending, from $250,000 and backed by property, can settle your purchase before the notice to complete expires, and is then repaid from your bank approval, a refinance or a property sale.
- •Secured Lending decides in hours, values the property with its in-house team and can settle within 24 hours, so a loan to settle your purchase can be in place before a notice to complete expires.
A notice to complete replaces the completion date you missed with a new date, and missing that new date gives the vendor the right to terminate. If you do not settle by it, the vendor can end the contract, keep or recover the deposit up to 10% of the price, and sue you for more. That is a stressful letter to receive, and while the notice is still running there is time to act on it.
We would be glad to help you settle before the notice expires. A short-term private loan backed by property is a good fit for this problem because it can be in place quickly. We lend our own funds, our in-house team values the property, and we can settle within 24 hours. The loan is then repaid by the bank approval, refinance or property sale you were already waiting on, so the bank loan you applied for still goes ahead. We lend to companies, including property developers, with loans from $250,000.
What the notice changes, and how long you have
Under the standard New South Wales contract, a missed completion date does not end the contract on its own. Clause 21.6 sets the general rule: "Normally, the time by which something must be done is fixed but not essential." Clause 15 then lets a party serve a notice to complete when completion has not happened by the date for completion, if that party is otherwise entitled to serve one.
The notice sets a new date. If you miss it, clause 9 gives the vendor the right to end the contract: "If the purchaser does not comply with this contract (or a notice under or relating to it) in an essential respect, the vendor can terminate by serving a notice." Termination is not automatic. The vendor has to serve that notice of termination.
How long you have depends on your contract. Some contracts fix the notice period in a special condition. Where yours does not, the notice must allow a reasonable time, and in New South Wales practice 14 days is commonly treated as reasonable. Read the date on the notice, and any time of day it states, and ask your solicitor or conveyancer to confirm both. Whether the notice is valid is also a question for them. We are a lender, and we do not give legal advice.
These clauses read the same in the 2022 and 2026 editions of the standard New South Wales contract. Special conditions in your own contract can vary them.
What the delay is costing now, and what expiry would cost
There are two separate costs: what you are paying while the notice runs, and what the vendor can claim if the notice expires and the vendor terminates.
While the notice runs. The printed New South Wales contract does not include interest for late settlement. Where it applies, it comes from the special conditions, which usually charge interest on the balance of the price for each day of delay. Many contracts also add a fixed fee towards the vendor's legal costs of issuing the notice. On a simple daily basis, the interest is the balance of the price, multiplied by the rate in your special conditions, multiplied by the number of days late, divided by 365. Your special conditions set the rate and the method, so ask your solicitor or conveyancer for a settlement figure that includes them.
If the notice expires and the vendor terminates. Clause 9 sets out what the vendor can do after termination:
| Settled before the notice expires | Vendor terminates after the notice expires | |
|---|---|---|
| Deposit | Clause 9 does not apply | The vendor can keep the deposit, or recover any unpaid part of it, up to 10% of the price |
| Other money you have paid | Clause 9 does not apply | The vendor can hold it as security for its claims, for 12 months after termination or until proceedings it starts in that time are concluded |
| Resale | Clause 9 does not apply | If the vendor resells under a contract made within 12 months after termination, it can sue for the shortfall on the resale and the reasonable costs of your default, the resale and any attempted resale |
| Other claims | Clause 9 does not apply | Instead of the resale claim, the vendor can sue for damages for breach of contract |
| The property | Transferred to you at settlement | Kept by the vendor, who can resell it |
The deposit clause is the one buyers most often ask about. Under clause 9.1 the vendor can "keep or recover the deposit (to a maximum of 10% of the price)". The printed contract sets the deposit at 10% of the price unless the contract states otherwise, so a buyer who paid 5% towards a 10% deposit can be pursued for the other 5% of the price. None of clause 9 applies to a purchase that settles before the notice expires.
How a short-term loan settles before the notice expires
The loan is made to the buyer. At settlement the loan funds are used to pay what is due to the vendor: the balance of the price, plus the late interest and any notice fee your contract adds. Settling also stops the daily late interest. You then repay our loan from the bank approval when it is issued, a refinance with another lender, or the sale of another property you own.
| Loan size | From $250,000, with larger loans assessed case by case |
| Interest rate | From 9.7% p.a. for a bridging loan or first mortgage, from 11.95% p.a. where a second mortgage is used |
| Term | 1 to 24 months, typically 3 to 6 months |
| Security | A first mortgage over the commercial, industrial or investment property you are buying, or a mortgage over another property you own |
| Maximum loan-to-value ratio | 70%. For a second mortgage, the first and second mortgages combined |
| Repayment | The bank approval when it is issued, a refinance to another lender, or the sale of another property you own |
The bank does not need to stop work on your loan. If the bank declines after we settle, a term of up to 24 months leaves time to apply to another lender or sell a property.
Working back from the expiry date
Count the business days between today and the expiry date on the notice. This is the order in which the loan is arranged inside them:
- •Day one. We receive the notice, the contract and the bank's latest letter, and how many days are left.
- •Within hours. In most cases we tell you within hours of receiving the deal whether we will proceed.
- •Valuation. Our in-house valuation team values the property, so there is no wait for a panel valuer. Asking the agent to arrange access for the inspection straight away keeps the valuation on time.
- •Letter of offer. If terms are agreed, we issue the letter of offer immediately.
- •Settlement. We lend our own funds, and we can settle within 24 hours. Your solicitor books settlement with the vendor's solicitor before the notice expires.
If your solicitor is asking the vendor for more days, you can apply to us at the same time. If we approve the loan, you then have a way to settle whatever the vendor answers.
Case study: $271,000 to settle a purchase by the next business day
A client received a notice to complete late on a Sunday for a property purchase in Norwest, New South Wales. The settlement deadline was the next business day, so the purchase had to settle by Monday afternoon.
We reviewed the application and issued a formal indicative offer within 4 hours of receiving the referral. Loan documents went out early on Monday morning, and by 4pm that day settlement was complete, with $271,000 funded with a first mortgage registered on title.
Why you missed the date decides how the loan is repaid
The bank approval is late. The bank is still assessing: a valuation to rebook, a credit sign-off, a document it is waiting for. Our loan settles the purchase, and you repay it from the bank loan when the approval is issued. Our bridging loans are structured for time-sensitive property transactions like this one.
The bank valuation came in below the price. Even a late approval will then not cover the balance. Our valuer values the property directly. Where a shortfall remains, another property you own, such as an investment property or your home, can back a second mortgage for the difference, with the first and second mortgages inside a 70% loan-to-value ratio combined.
Your own sale has not settled. If the money for this purchase was coming from a property you are selling, a bridging loan over that property and the one you are buying settles the purchase now. It is repaid when your sale settles.
If the bank has withdrawn its approval rather than delayed it, our page on settling when bank finance fell through covers that case.
If your notice was served outside New South Wales
The rules and the names differ by state. In Victoria, according to the Legal Practitioners' Liability Committee, most contracts require a written default notice before a party can act on the other party's default. The notice must set out the default and give time to fix it, usually 14 days. Where the contract permits, a notice that also says the contract is at an end unless the default is fixed, and costs and interest paid, in the time given is often called a rescission notice. In every state, your solicitor or conveyancer confirms the dates that apply to your contract. The loan works the same way wherever the property is: it settles before the deadline and is repaid by the bank approval, a refinance or a sale.
Frequently asked questions
I only paid a 5% deposit. Can the vendor claim more than that?
Yes, under the standard New South Wales contract. If the vendor terminates, it can keep or recover the deposit up to 10% of the price. Where your contract states a 10% deposit and you paid 5%, you can be pursued for the other 5%. If the vendor resells within 12 months, it can also sue for the resale shortfall and costs. Settling before the notice expires means the vendor never gets the right to terminate.
My bank says it will be ready a few days after the notice expires. What can I do?
You can settle now with a short-term loan, and repay it from the bank loan a few days or weeks later. The loan term starts at 1 month, and the rate is from 9.7% p.a. for a first mortgage. Your bank can keep working on the same approval.
My solicitor is asking the vendor for more time. Should I wait for the answer?
You do not need to wait. You can apply to us while your solicitor asks, so if the vendor says no, your application with us is already under way. Whether to request an extension, and on what terms, is a question for your solicitor or conveyancer.
What property can back the loan?
We provide secured loans backed by real property: a first or second mortgage over residential, commercial or industrial property. That can be the property you are buying, or another property you or your business own, up to a maximum loan-to-value ratio of 70% across all mortgages on it.
How Secured Lending Can Help
We would be glad to help you settle before your notice to complete expires. Our loan settles the purchase before the expiry date, so the vendor never gets the right to terminate under clause 9, and the bank approval, a refinance or a sale repays us afterwards.
A private loan suits this problem because it is quick and because it is secured against property. We lend our own funds, decide in hours, value the property in-house, issue a letter of offer as soon as terms are agreed, and can settle within 24 hours.
We provide secured loans backed by real property. If you would like us to look at your situation, it helps to have these to hand:
- •The notice to complete, with its expiry date and any time of day it states.
- •The contract of sale, including the special conditions.
- •The bank's latest letter, approval or valuation.
- •The property that could back the loan, its estimated value and any existing loan on it.
- •How you plan to repay the loan, and roughly when.
When the notice runs out in days, a phone call lets us ask our questions on the spot. You are welcome to call us on 1300 795 175 to talk it through, or send the details through and we will come back to you. In most cases, we can tell you within hours whether we can help.
