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Failure to settle property deal costs woman $200,000

A recent case reported by Stuff has cost one woman more than $200,000, after she failed to pay the full amount by a property settlement date.

The Kāpiti Coast property was originally listed as part of a 64-townhouse development in May 2021.

The purchase price for the property was $833,000. A deposit of $83,800 was paid by the woman, and as per the sale and purchase agreement, she was required to pay the balance on the settlement date.

Work on the development commenced in March 2022 and the property’s settlement date was 20 June 2023. The woman failed to make the settlement payment and was issued a notice by the property owner to settle by 20 July. Again, the settlement didn’t occur and a further urgent settlement request was made on 1 August, but that also didn’t occur.

The property owner then entered into a new sale and purchase agreement with a new buyer on August 31, who purchased the property for $702,000. The agreement with the woman was therefore cancelled and the property owner took court action against her.

The property owner said the company had incurred a loss of $52,200, taking into account the woman’s deposit of $83,800, which it retained. They also incurred other costs including $12,570 in real estate agent commission, $6471 for resale marketing, $10,456 for resale furniture staging and $5073 for legal and council costs. $36,000 was also claimed for interest on the unpaid portion of the sale price, for the period in which settlement was not met.

The woman was found liable for damages resulting from her breach of contract in the total sum of $122,768. That is on top of the $83,800 deposit already paid, meaning the total cost of failing to meet settlement came to $206,569.

What should I do if I can’t make the final payment on a property settlement?

If you are unable to pay the purchase price on a property, you should immediately contact your lawyer. The more time that we have to try and negotiate an outcome, the greater the chance that a solution can be found. Trying to negotiate on the settlement date rarely results in a favourable outcome for the buyer who can not pay the purchase price.

What does this all mean for you?

Defaulting on a final settlement payment can be a very costly mistake. Don’t get caught out. Always seek help from a lawyer to assist you with the sale and purchase process, and make sure you fully understand the terms and conditions of any agreement before you sign anything.

It is always best to involve your Lawyer early – we are here to help. Get in touch with the team today.