Seller Default?
When the Seller Is Late, the Buyer Doesn’t Wear the Cost: GRM LAW Secures Default Interest for Client
Matter snapshot:
Asset: Commercial lot in Portland (VIC)
Issue: Seller not ready, willing and able to settle on the due date due to a title caveat
Result: GRM LAW kept a GC 34 default notice on foot, negotiated default interest payable to the Buyer under GC 33, and had it credited on the settlement statement alongside other agreed adjustments
What happened
Settlement was scheduled, the Buyer was ready, and the Seller wasn’t—because of a caveat they needed to resolve. Rather than let time drift or absorb the cost of delay, we issued a formal default notice under General Condition 34 (GC 34) of the LIV/REIV (Jan-2024) contract, reserving all of the Buyer’s rights and confirming that default interest would accrue.
While the Seller’s camp initially queried the Buyer’s entitlement to interest, GRM LAW responded firmly and constructively, explaining how GC 33 and GC 32 operate together:
GC 33 (Interest): interest is “payable at settlement on any money owing under the contract during the period of default.”
GC 32 (Breach): the defaulting party must pay “any interest due under this contract.”
Read together, the clause set is symmetrical. If a Seller is the one who defaults (by failing to settle on time), the Seller pays contractual interest to the Buyer, calculated on the balance price for the period of delay, and it is accounted for at settlement (i.e., as a credit to the Buyer). The usual default regime (notice, 14-day remedy, termination/damages under GC 34–35) remains available in parallel.
We then tabled a clean, numbers-led settlement entry so there was no ambiguity about quantum, period, and direction of credit.
The commercial outcome
The Seller accepted that default interest was payable to our client and that it would be credited on the settlement statement.
We maintained the default notice and a “time of the essence” posture, while allowing a practical, short extension to complete—without waiving any rights.
Parallel settlement adjustments (including owners corporation fees and rent alignment to the contract) were agreed on sensible terms.
This is a textbook application of the LIV/REIV default framework in a way that protects the Buyer’s position and gets the deal done.
How the interest was calculated (and why it’s right)
Inputs (per contract & agreed figures):
Price: $1,950,000
Deposit: $97,500
Balance at settlement (money owing): $1,852,500
Due date: 8 October 2025
Completion date used for calculation: 23 October 2025
Delay period: 9 Oct–23 Oct (inclusive) = 15 days
Contractual rate (GC 33): Penalty Interest Rate + 2% p.a. (Jan-2024 edition)
Maths:
Daily interest = $1,852,500 × (contract rate) ÷ 365
At 12.00% p.a. (PIR 10% + 2%), daily = $609.04
15 days × $609.04 = $9,135.62
Statement of Adjustments entry (Buyer credit):
Default interest (Vendor late settlement under GC 33): 9/10/2025–23/10/2025 (15 days @ $609.04/day) … $9,135.62 – credit Purchaser.
A small drafting note: we use the conservative market convention—exclude the contractual due day and include the settlement day, because the money remains unpaid until completion. If the other side presses to exclude the settlement day, that’s a discussion about one day of interest, not the principle.
Why this matters (beyond this deal)
Symmetry protects buyers too. Many assume “penalty/default interest” is a purchaser-only risk. It’s not. The LIV/REIV defaults work both ways.
Keep the default notice alive. Accommodating a short extension is fine—do it without prejudice to the notice so your interest entitlement keeps running until completion.
Put the calculation on the page. A precise period, daily rate, and settlement-credit line item removes oxygen from pushback.
Don’t conflate remedies. Interest under GC 33 is separate from the right to terminate and claim damages under GC 35 if the breach isn’t remedied.
GRM LAW’s approach
Our posture was firm on rights, flexible on logistics. We:
Issued a clear GC 34 default notice;
Grounded the interest claim in the contract text (GC 33 + GC 32);
Circulated a settlement statement extract showing the exact default interest credit; and
Preserved the Buyer's options, including termination and damages, if timing slipped further.
The end result: our client didn’t pay for the Seller’s delay—and the transaction still completed smoothly.
Key takeaways for buyers & sellers
Late is costly—for either side. If you’re in default, expect contractual interest to run against you.
Clarity wins—state the basis, rate, dates, daily figure, and where it lands on the statement.
Rights ≠ roadblocks—you can preserve enforcement rights and still facilitate a pragmatic settlement.
If your deal is facing last-minute turbulence—title issues, third-party caveats, lender timing, or anything likely to nudge your settlement date—speak with GRM LAW. We’ll protect your position, quantify the moving parts, and keep the matter both compliant and commercial.
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For more information, please contact Gavin McInnes on 07 3367 8681 or gmcinnes@grmlaw.com.au.
The information contained in this article is general in nature and cannot be regarded as anything more than general comment. Readers of this article should not act on the basis of this comment without consulting one of GRM LAW 's legal practitioners who will consider their particular circumstances.
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