What does "time is of the essence" mean in a contract?
Time is of the essence of the Contract. This is a legal term that means you must perform your obligations strictly by the due date. For example, subject to any right of extension you may be entitled to exercise, you must be able to settle by 5pm on the settlement date; otherwise the Seller may issue the Buyer a Notice of Default requiring the Buyer to complete settlement within 14 days. If the Buyer fails to complete settlement within this period, the Seller may either terminate or seek to enforce the Contract. In both cases, the Seller may claim compensation from the Buyer, including charging you default interest on the unpaid balance due at settlement and passing on additional legal costs incurred by them to the Buyer due to their delay in completing settlement.
Can the parties extend Settlement Date?
Due to some special circumstances, either party may request settlement date to be extended by a certain period of time. The settlement date can only be extended by mutual agreement of the parties.
If you anticipate not be in a position to complete settlement by the due date, please advise your representative as soon as possible so they may seek a settlement extension from the Seller. However, the Seller does not have to agree to your extension request and they may impose conditions and claim compensation on their acceptance of your extension request.
Why should I consider the possibility of an extension of the Settlement Date?
You should take the possibility of an extension of the Settlement Date into account particularly if the Settlement Date is critical to you or your plans. For example, you must consider this possibility when arranging removalists or moving dates.
If you are intending to occupy the property as a principal place of residence, you will also need to organise the move-in. It is up to you to make appropriate logistical arrangements, including packing, booking movers, connecting utilities, etc. Whilst most Buyers would organise for the move-in to happen on settlement date, this is generally not advisable because settlement may not occur until late in the day. Keys and general access to the property will not be given to you prior to settlement unless you have specifically asked for it under an early access agreement with the Seller.
It is recommendable that you allow for at least the day after settlement date before allowing your movers to arrive. Movers generally charge by the hour so it is important to book for the move to occur only after you are certain that you will get access to the property.
If you need to have early access or possession of the property, you may instruct your representative to negotiate a licence agreement for you, subject to the Seller’s consent.
What are Settlement Adjustments?
You generally will not pay the exact amount on the Contract. Adjustments are made to proportionally allow for payments the Seller has already made to government bodies during the period that Settlement occurs.. These can include things like council rates, water charges and owners corporation fees (if applicable), but not things like utility bills.
