What happens to Contract dates over the Christmas/New Year period?
It is that time of the year again – Christmas and New Year are fast approaching! It is quite common for us property lawyers and conveyancers to see the volume of contracts and settlements increase exponentially in late November and early December in anticipation of Christmas.
Quite simply, it is very convenient for buyers and sellers to use the Christmas/New Year period as an opportunity to move.
What happens if the building and pest condition, finance condition or Settlement Date fall over the Christmas / New Year period?
Do the solicitors and banks still have to work? Generally speaking – yes they do! This means that buyers and sellers need to be aware of the impact of the holiday period on the critical dates in their conveyancing contracts.
What happens to critical dates that fall on non-business days?
Under the standard REIQ Contracts (residential or commercial), they provide that if a critical date falls on a non-business day, then it must be done on the following business day. This means that if you are required to notify the seller whether you have finance on a Saturday, then this date will automatically hold over and fall due on the Monday (when everyone is back working).
In the most recent version of the REIQ Contract, the following applies:
“Business Day” is usually defined as meaning –
- Monday to Friday; except where there is a public holiday
- A day in the period 27 – 31 December 2019 (inclusive)
The effect of excluding 27 – 31 December 2019, means that no critical contract dates can fall between 25 December – 1 January. If anything is required to be done during this time, it will be required to be done from 2 January 2020 onwards.
Usually this extension means that there is a pile up of critical dates and settlements all due first day back in the New Year. From a practical point of view, all the work to prepare for settlement will need to be finalised by the banks and solicitors/conveyancers prior to Christmas to ensure a smooth Settlement in the New Year.
In saying this, not all banks will be ready to book before the Christmas holidays commence as loan documents may not all be returned or verified by the banks on time. It is crucial that you try to have your bankers and brokers escalate matters with your banks to try and avoid any settlement delays.
If it is possible, we recommend that the parties agree for contract dates to fall a couple of days into the New Year or a week into the New Year and not the first day back. That way, there is a better chance that the parties will be able to settle and the banks are able to provide funds.
It is good practice and prudent to have your solicitor confirm what version of the Contract you have signed, to ensure that the current version of the Contract is being used and that the above dates are effective.
Cooling Off Periods
Despite our advice above, the same does not apply to Cooling-Off periods. As the Cooling-Off period is imposed by statute, the period is not covered by the standard conditions in conveyancing contracts, but by legislation.
As a result, the non-public holidays between Christmas and New Year are counted in the calculation of the 5 business day cooling off period. If you are looking at signing a Contract to purchase a property over the next week, you should keep this in mind because it is likely that the cooling-off period for your Contract will expire during the time that most law firms and real estate agencies are closed.
If you think that you will need to terminate a Contract in the cooling-off period and the expiry of that period will fall in the holidays, you should contact our experienced conveyancers at Lockett McCullough Lawyers to discuss your options.
Both our Toowong and Albany Creek offices will remain open over the Christmas and New Year period except for the Public Holidays. However, on the Public Holidays we will still be available by email should you wish for us to review a Contract of Sale for you.