Key Takeaways
- A notice to complete is a legal document that sets a deadline for a party to fulfil its contractual obligations.
- The notice must allow a reasonable time to comply, typically based on industry standards and the complexity of the transaction.
- A notice may be invalid if it’s not served properly, if the issuing party has breached the contract, or if it sets unreasonable timeframes.
- Failing to respond can lead to the loss of your deposit, a breach of contract, or legal action.
- For business owners, raising funds quickly can be your best move when you receive a notice to complete.
If you’re running a small business in Australia, it’s possible for you to receive a notice to complete from one of your vendors. If your business has recently received one, it’s important to understand what it is, why it was issued, and how to deal with it effectively. A misstep in this area could have serious consequences, including the loss of your deposit and facing a lengthy legal dispute. This guide will provide a clear understanding of what you need to know and the steps to take when facing a notice to complete.
What Is a Notice to Complete?
A notice to complete is a formal legal document requiring the recipient to fulfil their obligations under a contract. These obligations typically revolve around the completion of a sale or settlement. Basically, it’s a call to action from one party to another to comply with the agreed terms within a specified timeframe. This notice is commonly used in transactions when one party is ready to settle, but the other party is unable to meet the original deadlines.
Why Do Businesses Receive a Notice to Complete?
In business transactions, a notice to complete is often used when one party fails to meet agreed-upon deadlines, such as during a commercial property sale or large-scale contract negotiations.
The most common reason is that a buyer (purchaser) has yet to complete settlement for a property transaction by the settlement date, and the seller (vendor) uses this legal instrument to ensure they finish the transaction.
Some common reasons a business might not meet contract obligations and thus receive a notice to complete include:
- Delays in Financing: If a buyer is unable to secure the necessary financing or there are delays in fund transfers
- Contractual Issues: Confusion or disputes over contractual terms can delay settlement
- Market Conditions: In volatile markets, one party may rush to finalise the deal to secure favourable terms
- Unexpected Issues: Unforeseen logistical or operational issues can delay settlement.
Potential Consequences of Failing to Respond to a Notice to Complete
Failing to respond appropriately to a notice to complete can have severe consequences for your business, including:
- Forfeit of Deposit: If the notice relates to a property transaction, failing to comply can result in losing your deposit, which could be a significant financial hit for your business.
- Breach of Contract: Ignoring the notice or failing to complete the transaction within the specified time could lead to a breach of contract, opening your business to legal claims and damages.
- Termination of the Contract: The party issuing the notice could terminate the contract if you don’t comply, leading to the loss of a valuable business opportunity.
- Legal Action: The other party may take legal action to enforce the contract or seek damages, which could further harm your business financially and reputationally.
Notice to Complete and Reasonable Time
One of the key considerations in assessing the validity of a notice to complete is whether it allows for a reasonable time to fulfil your obligations. In legal terms, what constitutes a “reasonable time” can depend on the specifics of the transaction, the nature of the breach, any external factors, and the industry standards.
For example, a standard timeframe for responding to a notice to complete in property transactions is 10-14 days (the timeframe for a notice to complete in NSW is 14 days). However, depending on the complexity of the transaction or unforeseen delays, what is considered “reasonable” may vary.
If you believe that the timeframe set is unreasonable, this could be grounds for disputing the notice. It’s important to work closely with a legal professional to determine the best course of action, whether that involves renegotiating the timeline or taking the matter to court.
What Should You Do After Receiving a Notice to Complete?
Receiving a notice to complete means that time is now of the essence. Failing to act quickly could lead to significant losses. Here’s how to deal with it effectively:
1. Review the Notice Carefully
The first step is to carefully review the details of the notice. Ensure that all the information is accurate, including the contractual obligations it refers to, the deadlines provided, and any stated penalties for non-compliance.
2. Consult Legal Professionals
A notice to complete is a formal legal document, and it’s important to get legal advice to understand the full implications. A legal professional can help verify whether the notice is valid and offer guidance on the best steps to take moving forward.
3. Determine if the Notice Is Valid
In some cases, the notice to complete may be invalid, which could give you grounds to contest it. A notice may be deemed invalid if:
- It does not specify a reasonable timeframe for compliance.
- It was issued prematurely based on the given timeline.
- The notice doesn’t comply with contractual terms.
4. Assess Your Ability to Comply
Determine whether you can realistically meet the obligations outlined in the notice. If there are issues preventing you from doing so, you may need to explore options like requesting an extension or renegotiating certain terms. Be proactive in communicating with the other party and showing your intent to complete the transaction as soon as possible.
5. Prepare to Complete
If the notice is valid and no extension is granted, make every effort to comply with the contract’s terms within the set timeframe. This could mean securing the necessary funds, delivering required documents, or taking other actions necessary to complete the transaction.
What to Do When You Receive an Invalid Notice to Complete
There are cases where a notice to complete might be invalid. If your business has received such a notice, you must address it quickly. Here’s how to handle an invalid notice to complete:
1. Identify the Grounds that Render the Notice Invalid
There are legal grounds that make a notice to complete invalid. Determine the reason why the notice you received is invalid and be ready to respond accordingly.
2. Respond to the Invalid Notice
If you believe the notice is invalid, it’s essential to respond in writing, detailing the grounds for disputing its validity.
3. Negotiate a New Timeline
If the notice is invalid due to an unreasonable timeframe, you can negotiate with the other party for a more reasonable time to complete the transaction.
4. Seek Legal Recourse if Necessary
If negotiations fail, and the notice is truly invalid, you may need to escalate the matter legally. A legal professional can assist you with taking steps to prevent the other party from terminating the contract or seeking damages based on the invalid notice.
Raising Funds to Deal with a Notice to Complete
When you receive a notice to complete related to settling a transaction, a course of action you can take is to secure fast finance to complete the transaction and avoid legal consequences. In Australia, there are several forms of financing available to business owners dealing with a notice to complete, including:
1. Unsecured Business Loans
If your business has received a notice to complete, unsecured business finance is one method to settle the contract. Funds can be released in under 24 hours if your business is approved.
Using unsecured business finance as a bridging loan can help you avoid severe legal consequences by holding up your end of the contract quickly. With the funds you receive, pay your vendor immediately, then use your business income to pay off your loan onwards.
Businesses can borrow up to $4 million in unsecured funding and be eligible for early payment discounts if they use a reputable expert who knows where to find these products.
2. Asset-Based Finance
If you have unencumbered or wholly owned assets, you can raise capital by borrowing against them with asset-based finance.
You can use property, large-scale industrial machinery, fleets of vehicles, and other manufacturing or retail assets. There are many asset categories that can be used to raise bridging finance.
You could leverage your property with a caveat loan or through fast private lending using a first or second mortgage. These are special short-term property loans for bridging finance with typically shorter loan terms.
3. Specialist Lending
To rectify a notice to complete, you can rely on specialist lenders that can help provide fast approvals and tailored bridging finance solutions for your business.
Specialist lenders may raise capital from numerous sources. Using their knowledge and experience, they can have settlement completed within a matter of days — not the weeks or months you may be facing with a traditional bank or financial institution.
To Sum it Up
Understanding what a notice to complete is and knowing how to respond can protect your business from unwanted financial and legal repercussions. Whether you are dealing with a valid or invalid notice, the key is to act quickly, consult with legal professionals, and communicate effectively with the other party.
To reach notice to complete settlement, it’s important to secure funding quickly through bridging finance and other forms of lending. This way, you can hold up your end of the deal and maintain good standing with your vendors.
Dealing with a Notice to Complete?
If you need urgent funds to ensure you aren’t liable for breach of vendor contract and risk the possibility of losing your deposit, contact the team at Dark Horse Financial. We have a range of solutions that can help settle a notice to complete in NSW, Victoria, and anywhere in Australia. We’ll ensure your deal gets completed.
Disclaimer: The information on this page does not take into account your personal circumstances, is not legal advice or any other kind of advice and should not be relied upon for any purpose. You should always obtain professional and legal advice before making any decisions.
