What happens if you can't settle on time?

The short answer is that being late costs you straight away, and it gets worse the longer it goes on. Money that reaches the seller’s lawyer after 4pm can cost you a day’s interest, and the interest keeps adding up every day after that.

But interest is the least of it. Once you’re late, the seller can send you a notice giving you twelve working days to settle. Miss that deadline and the seller can cancel the sale and keep the money you paid upfront. They can also sue you for what else they lose, and that can come to far more.¹

If it’s the seller holding things up, you have rights of your own. Either way, what happens depends on the law and on what’s in your agreement. Read on for how it works, step by step, and why the money you paid upfront can turn out to be the smallest part of what you lose.

What has to happen on the day you settle

The day the money changes hands is settlement, the day your lawyer pays the balance of the price and the property becomes yours. Your lawyer also arranges for your ownership to be recorded on the title. The title is the official record of who owns a property and what rights and restrictions come with it. Older paperwork calls it a certificate of title.

Your agreement sets that day, and calls it the settlement date. Most of the rules about running late come from it too. When we say “the standard form”, we mean the one the Law Association and the Real Estate Institute publish. Yours may be on another form, or someone may have changed it, so ask your lawyer which you have.

On the settlement date, you pay the rest of the price through your lawyer, who pays the seller’s lawyer. The seller’s lawyer then releases the papers that put the house in your name. Unless it’s sold with tenants, the seller must also hand it over empty that day, with the keys.¹

The part of the price you paid earlier is the deposit, a sum of money, agreed as part of the price, that you pay upfront to secure the sale. If you pay it to the agent, they must usually hold it for 10 working days before paying it to anyone. If the deal falls through, you’re usually entitled to it back when a condition isn’t met. You’re not entitled to it back just because you’ve changed your mind.

The amount is up to you and the seller, and the agreement shows yours on its front page. Keep that number in mind, because it’s the money the seller can keep if things go badly wrong.

You get the keys once your lawyer says the sale has gone through. Settlement works like a chain, though. If you’re selling a place the same day, or the seller is buying another one, there are more links that can hold things up. So if you can, plan to move in at least a day later.

If your money is late

On the standard form, a working day runs from 9am to 5pm, and money that arrives after 4pm costs extra. If it lands between 4pm and 5pm because of a hold-up on your side, you pay the seller a day’s interest on it. If the next day isn’t a working day, you pay for those days too. So money that lands at 4.30pm on a Friday costs three days’ interest.¹

It happens. In one 2016 settlement, the buyer’s money reached the seller’s lawyer at 4.25pm, through no fault of the buyer’s lawyer. The seller charged $1,032 in penalty interest, paid the following Monday.²

If the money arrives after 5pm, it counts as paid on the next working day. From the settlement date, you owe interest on whatever is unpaid until it counts as paid (though only if the seller can show they were ready to do their part).¹

You may hear this late interest called penalty interest. Its rate is on the agreement’s front page, as the “interest rate for late settlement”. If nobody filled it in, it’s the rate Inland Revenue charges on unpaid tax plus 5% a year, which comes to 13.97% a year as at October 2026.³

It’s charged on what you owe, not as a set fee. At that rate, $600,000 unpaid costs about $230 for each day late.

The reason you’re late doesn’t matter. On the standard form, you’re in default whatever the cause, so a delay at your bank counts against you.¹ The date moves only in a few narrow cases the agreement sets out, like a pandemic lockdown. A slow bank isn’t one of them.

All of that is between you and the seller. Your bank is a separate matter: you still pay the seller, and if the bank was at fault, you may be able to claim the cost back from it afterwards.

In 2025, a bank sent a buyer’s final figures five days late, and wrong. He ran up penalty interest and legal fees, and the bank later refunded both, $2,400 in all. The Banking Ombudsman then recommended $1,500 more for the stress.⁴

Being late can also leave you with nowhere to go. Until you’ve paid, the seller doesn’t have to let you move in.¹ So if the movers are booked and the money is late, you may have a truck full of furniture and nowhere to put it.

That happened in Wainuiomata on the Thursday before Easter in 2012. The buyers’ movers were waiting when their bank refused to release the loan, because the house couldn’t be insured. Their old home was already sold, so they rented the house from the seller until they could settle.⁵

If you can see the money won’t be ready, ask for more time early. The date is part of the agreement, so moving it takes everyone who signed, and the seller doesn’t have to say yes. The Real Estate Authority tells agents that a change like this must be written on the agreement and initialled by every party.⁶

Sellers do sometimes agree. One buyer whose loan was running late got a couple of weeks more.⁷ Others attach terms, like the Manurewa sellers further down, who wanted more paid upfront. Until a new date is agreed, the old one stands, and the interest keeps adding up.

The settlement notice: twelve working days

Once the settlement date has passed, the seller doesn’t have to keep waiting. As long as they’re ready to settle themselves, or held up only by something you’ve failed to do, they can send you a settlement notice. It’s a formal notice giving you a last deadline to settle.¹

From the day the notice is served, you have twelve working days. Served means formally given to you or your lawyer, and an email to your lawyer counts. So your twelve days can start before you’ve even heard about it.

Time is strict here, so the thirteenth day is too late. Only the seller can give you more time, by extending their notice. Weekends and public holidays aren’t working days, and nor is anything from 24 December to 5 January. If the twelve days would run out between 6 and 13 January, the deadline moves to the first working day after the 13th.¹

A notice is the usual next step, but it isn’t the only one. The seller can also go straight to court to make you go through with the sale.

If the twelve days run out

Not being able to pay won’t get your deposit back. Once the twelve days are up, the seller has a choice. They can ask a court to order you to go through with the purchase. Or they can cancel the agreement, keep your deposit (up to 10% of the price), and sue you for their losses as well.¹

Once the seller can cancel, signing up a new buyer counts as cancelling your agreement. The seller’s losses can come to far more than the deposit, and the agreement doesn’t cap them. If the house sells again for less within a year of the deadline, that loss can be part of the claim.

So can interest on the unpaid price, the bills for selling it again (such as advertising), and running costs like rates and upkeep until the new sale settles. And if the new buyer pays more than you agreed to, the seller keeps the extra.¹ One couple in Manurewa found out how far it can go.

In 2021, Sonny and Anna sold their house there to move closer to family in Whakatāne. A buyer, Jay, agreed to pay $1,160,000, with a 5% deposit of $58,000.⁸

Six weeks before the settlement date, he asked for a lower price and six more months. They offered more time only if he paid more upfront, and he said he couldn’t. When he didn’t settle, they served a settlement notice two days later. Four weeks after that, they cancelled.

By then their furniture was in storage, and they were living out of a bag, on an airbed. The market had fallen, and the house sold again for $378,500 less.

On top of the deposit he’d lost, the High Court ordered Jay to pay them more than $430,000. That covered the rest of the shortfall, penalty interest, the costs of selling again, and rates. It came to more than seven times the deposit, and the Court of Appeal upheld it in 2024.⁸

If it’s the seller who’s late

Sometimes it’s the seller who isn’t ready. They haven’t finished moving out, or the keys are missing, or they’re waiting on a house they’re buying themselves. Your lawyer is the first person to call, and works it out with the seller’s lawyer.

On the standard form, the house has to be empty on the settlement date, unless it’s sold with tenants. If it isn’t, for whatever reason, and you can show you were ready to pay, the seller owes you for each day of the wait. You choose between what you reasonably spend on somewhere to stay and storing your things, or interest on the whole price.¹

Meanwhile, you owe the seller the interest your unpaid money earns, or would earn, in your lawyer’s account while you wait. Some costs come off that, including the interest on your loan (your lawyer will work it out).

Even a short delay costs the seller. In 2023, a padlock left on a gate kept a buyer out for one night. He had no extra costs, so he took the interest option: $200.05. The same decision found that an empty house doesn’t have to be a clean one, just clear of the seller’s things and rubbish.⁹

Longer ones cost more. In a 2024 case, a seller moved out five days late and left the house infested with rodents. A Disputes Tribunal referee ordered him to pay the buyers $11,024, mostly for the damage, and $500 for the delay.¹⁰

So a seller who needs to stay on after settlement has to agree it with you first. Otherwise these costs apply from the settlement date. In a 2024 case, buyers agreed to one extra day in writing, with $3,000 held back until the sellers had gone.¹¹

If the delay drags on, you can send the seller a settlement notice yourself, as long as you’re ready to settle. The same twelve working days apply. If they run out, you can ask a court to make the seller go through with the sale. Or you can cancel, and get back your deposit and anything else you’ve paid, with interest.¹

Something missing or broken works differently, and it’s easy to get wrong. Say the dishwasher listed in the agreement isn’t there, or doesn’t work. You still have to settle on the day, in full. You can’t hold money back unless the seller agrees.⁹

Hold it back anyway and you’re the one who’s late, with everything above counting against you. Instead, if the house is sold empty, the agreement lets you visit once before the settlement date, to check the house and what comes with it. If something’s wrong, your lawyer can send the seller a claim for compensation by the working day before the settlement date.¹

If the seller agrees the amount, it comes off the price. If not, the amount in dispute goes to a neutral holder until it’s decided. So leave the visit until that last day and you’ve left almost no time.

Settling doesn’t mean giving up a claim. The agreement’s promises carry on after settlement, so you can still claim for a breach later.¹ A doubt about the house is no reason to delay settling. In 2025, buyers who found a hole in their garage floor settled anyway, kept their right to claim, and later won $6,842.50 in the Disputes Tribunal.¹²

If your deposit is late

There’s one more deadline that can cost you the house, and it comes long before settlement day. On the standard form, your deposit is due as soon as both sides have signed, unless the agreement sets another time.¹

If it’s late, the seller can serve you a notice asking you to pay. You then have until the end of the third working day after it’s served, and time is strict. If you still haven’t paid by then, the seller can cancel the agreement.¹

As with a settlement notice, an email to your lawyer counts as served. So your three days can start before you’ve heard about it. Ask your lawyer when your deposit is due, and how you’ll pay it.

Other pages that may help

If your agreement still has conditions, our guide to conditions covers how it gets to the point where you’re committed. If you haven’t chosen someone to act for you yet, see do you need a lawyer.

What to ask your lawyer

1. Is my agreement on the standard form, and has anything about late settlement been changed?
2. What interest rate for late settlement is in my agreement, and what would one day late cost me?
3. When will you need the money from my bank, and from me, to settle before 4pm?
4. When is my deposit due, and who do I pay it to?
5. I'm selling a place on the same day. If that sale runs late, what happens to my purchase?
6. If the seller isn't out on the day, what will you do first, and what should I keep receipts for?

Say these as they are written. They are normal questions to ask.

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