A delay in sending through finance approvals can lead to a delay in settlement.
Many settlements are conditional upon a finance approval, with settlement scheduled to occur a specific number of days (often, 21 days) after finance is approved. The settlement date is based on which date finance was approved, no matter which date the finance approval actually arrives in our office.
If a finance approval doesn’t arrive in our office until several days after finance was approved, the settlement agent is left with less time to work on the file, and settlement could well be delayed as a result.
For example, in a recent settlement case, we received the initial paperwork for the settlement three days after finance was approved – but as the finance approval was not included with that paperwork, we were unaware that the deal had become unconditional.
Two days later, a conversation with the client revealed that finance had indeed been approved earlier than the due date, and the client forwarded us a copy of the finance approval. They told us that they had sent it to the real estate agent earlier.
The agent, however, didn’t forward us their copy of the finance approval until ten days after finance had actually been approved. Although we follow up finance approvals on the date they’re due, in this case that would have been three days before the agent forwarded us the finance approval. As a result, we would have lost a week in which we could have been working on the file.
That delay would have left us with just 11 days to complete settlement. Some tasks are unavoidably long – for example, discharging the mortgage often takes banks 10 business days to complete – so there would have been a real likelihood of settlement not completing on time. A settlement delay would likely have led to disgruntled clients, and potentially even penalty interest.
Fortunately in this case, settlement occurred on time because the buyer took the initiative to send through the finance approval themselves.
To avoid settlement delays and disappointed clients, ensure you (or your admin staff) send finance approvals through as soon as you find out that finance has been approved. Sending through documents promptly increases the likelihood of a timely and stress-free settlement.
Image by Ashley Ringrose via Flickr.