What happens when a property sale does not complete on closing day?

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What happens when a property sale does not complete on the intended closing date?

General conditions 20, 21 and 22 of the Law Society of Ireland 2019 contract deals with completion of the sale and the payment of interest.

Where there is default on the part of the purchaser in failing to complete the sale on closing day the purchaser is to pay interest at the contract rate and the vendor will be entitled to any rents and profits up to the actual date of closing.

If the vendor has been in default and has not been ready, willing and able to complete on closing day he must give the purchaser at least 5 working days notice of any proposed new closing date. The conditions of the contract provide that the vendor retains the right to pursue a claim for interest pursuant to the contract.

Completion notices

General condition 36 deals with completion notices. Either party can, pursuant to this condition, issue a completion notice making time of the essence thereby creating a cut off point. 

28 day notice (general condition 36)

The completion notice is a 28 day notice served on the other party and makes time of the essence. It must be served by delivery, post, or fax.  There is two separate completion notices:

  1. a vendor’s completion notice for service on the purchaser
  2. a purchaser’s completion notice for service on the vendor

The vendor may then

  1. sue for specific performance and damages
  2. forfeit deposit and resell
  3. rescind the contract

The purchaser may

  1. sue for specific performance and damages
  2. ask the vendor to return the deposit

Forfeiture of deposit and resale (general condition 37)

General condition 37 makes provision for forfeiture of the deposit and resale by the vendor. If the resale takes place within one year after the closing date the deficiency (if any) arising on the re-sale, along with costs and expenses, shall be made good by the purchaser to the vendor.

Damages for default (general condition 38)

General condition 38 provides for damages for a vendor or purchaser where an order for specific performance has been made. 

It also provides for damages for the purchaser where the vendor has failed to show title to the property in accordance with the contract.