Condition in the contract for additional payment if settlement not in PEXA

[lstruska]

So we all get annoyed when the contract prepared by us for our vendor client provides that settlement must take place electronically and the purchaser’s representative insists on this condition being removed because they are unwilling to adapt to the changing face of conveyancing practice.

It has been suggested to me that I could include a condition in the contract providing for an additional payment of the vendor’s legal costs by the purchaser if the contract cannot settle electronically. This could be an incentive to other practitioners to move on from the dark ages of paper settlement and settle in PEXA.

However, such a condition is likely to be unenforceable under s 42(3) of the Property Law Act 1958 which states that:

“No contract of sale relating to land shall contain a clause or condition stipulating for the payment by the purchaser to the vendor or to the legal practitioner or conveyancer of the vendor of any costs and expenses”.

[KC]

I too have been thinking about a special condition for this purpose.  The PEXA settlement fee however is not payable by the purchaser to the Vendor.  Would it not be in the same category as a special condition that I have come across which  requires the purchaser to settle at the Vendor's Solicitors/Conveyancers office or otherwise pay a fee to settle elsewhere?

[BelindaLeFevre]

In NSW I have seen this done - particularly in the case of developments, but more along the lines of " an additional fee for paper settlement" clause included in the contract.  This is in recognition of the additional costs associated with a paper settlement (time on the phone, agent/staff fees for attending bank and settlement, resolving issues as a result of delayed lodgement such as rates in vendors name post settlement).

Of course it is a matter for each practitioners own consideration and I echo your frustrations around appetite for electronic settlement!