What happens when the closing date comes and goes? Serving a Completion Notice.
- It is a common question both from vendors and purchasers involved in property transactions to ask what happens in the event that the sale does not close on the contractual closing date, specifically where the other party fails to hold up its side of the bargain. For example, where the purchaser fails to transfer the balance purchase funds by the closing date.
- General condition 36 of the Contract for Sale provides the party which is in a position to complete the transaction with the option to serve a ‘Completion Notice’ on the other wherein the other party would be required to complete the transaction within 28 days after the date of service of the Completion Notice (excluding the day or service). In order for the Completion Notice to be effective, the party serving it must be able to demonstrate that they are ‘able, ready and willing’ to complete.
- Once 28 days elapses and the purchaser has still not furnished the balance funds to complete the transaction, the vendor is entitled to retain the full contract deposit and enter into a new agreement with a new purchaser. If the vendor fails to complete the transaction within 28 days, the purchaser may issue proceedings against the vendor for specific performance of the contract. The purchaser is also entitled to the full refund of the deposit. If the full deposit is refunded, the purchaser shall no longer be entitled to specific performance of the contract.
- It is important to note that where purchasers require draw down of loan funds to complete the transaction, they will likely be protected by the existence of a ‘subject to loan’ clause which will have been included in the contract at the pre-contract stage by the purchasers solicitor with agreement from the vendors solicitor. The effectiveness of a Completion Notice is therefore blunted where the cause of the delay relates to the availability of the purchaser’s loan funds.
- In practice, it is common for a variety of reasons for the closing to be delayed by a few days and parties generally exercise patience and understanding in these circumstances. The most common delay to a closing is where the purchasers loan funds have not been released in time by their lender. It should be noted that the serving of a Completion Notice is a last resort and should only be exercised in circumstances where there are serious concerns that the other party may unduly delay completion.
if you have any queries in relation to conveyancing matters please do not hesitate to contact Adam Rockett, Pauline Horkan, Sally-Ann McCoy or Simone Murray on 01 296 0666
