Consequence of a Delay or Late Completion Conveyancing

January 17, 2018

Once Contracts have been exchanged for a property transaction certain terms come into effect.  

These include: –


The date for completion is fixed
A deposit is, or will become, payable – usually for 10% of the purchase price but sometimes less by agreement
Interest will accrue on a daily basis should completion be delayed
On payment of the price vacant possession of the property must be given
This means that the funds for the total price must be paid on the date agreed.  Complications can arise as a consequence of a late completion, especially where the transaction is linked to others in a chain of transactions.


Any delay beyond the agreed completion date is a breach of contract. Where a delay is anticipated all parties should be informed
The sellers solicitors will have given an undertaking to discharge their clients mortgage on the day of completion and therefore this is one issue which will need to be discussed.
Other issues to be resolved will include


Release of keys. Especially where there is a chain of transactions as all parties will have removals booked and have their furniture on vans ready to be transported to the new property. The best way of dealing with this property in the interim is to refer to the Standard conditions of sale 5.2 which forms part of the Contract. This stipulates that a purchaser taking possession prior to completion will be treated as a licensee (Bretherton v Paton 1986 EGLR 172)


Payment of interest – this will be calculated according to the terms of the contract (the Law Society Rate is 4% above the base rate of the appropriate Bank)


The deposit should be paid in full. Once a notice to complete is served the full 10% becomes payable if it has not already been paid.  This can cause a problem if 10% was not available on exchange of contracts.

However, where the buyer defaults on completion the court does have discretion to return the deposit to the buyer in certain circumstances, for instance where the seller achieves a higher price on a re-sale.


A Notice to complete is usually served to protect the Seller’s interests. This makes “time of the essence”.  The notice provides an extra 10 working days to allow completion to be effected and this time limit is non-negotiable.  If completion is not effected within the given tie sale, the Seller has the right to rescind the Contract, keep the 10% deposit (and sue for the full amount if a lesser amount was paid on exchange) and sell the property elsewhere. This would of course mean that any occupier on a licence would no longer have the right to remain in occupation.


Specific Performance. Sometimes it may be possible to prove that there is no bar to the purchaser completing and the seller could apply to the court to force the buyer to complete. In practice where residential sales land purchases are concerned this is rare and would be more likely to be used in circumstances where land or a new build property is concerned.


If the subject of the contract no longer exists, due to an act of god, such as a  landslip it is possible that the contract is terminated due to frustration. However, if the property is insured against such risks it is likely that the contract would proceed but that the insurance would be called upon to reinstate the property.


It is usually recommended that any purchaser takes out insurance for the property being purchased once contracts have been exchanged as risk passes to the purchaser. However, care needs to be taken as if the Seller continues to insure the property until completion (which he is advised to do in case completion does not take place) then there will be two policies in force. This can make claiming payment difficult as each insurer will claim that the responsibility for payment lies with the other.


This can be resolved by Standard Clause 5.1.5 of  the Contract  which requires the buyer to complete subject to an abatement in the price thus leaving the seller to resolve the dispute with his own insurers.

The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal advice and should not be relied upon as advice. Please see our website terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact one of our lawyers who will be happy and able to advise you on your own particular circumstances.