Settlement shortfall: closing the gap before a business property or purchase settles

Settlement day is the least forgiving deadline in business. The contract names a date, sometimes a time, and every party — vendor, purchaser, banks, solicitors — is lined up around it. When the numbers stop adding up a week out, there’s no room to improvise.

This page is about the shortfall itself: why it happens, what can close it, and how to make sure the money arrives with the settlement rather than after it.

Why do settlement shortfalls happen?

Usually through no great fault of the buyer. The common causes:

• A low valuation. The lender values the property below the price, so the loan is smaller than planned.
• A lender changes its offer after reviewing financials or the property.
• Costs grow. Stamp duty, registration fees, adjustments for rates and rent, and legal costs add up to more than budgeted.
• Money from another deal is late — a sale that hasn’t settled, an investor who hasn’t paid in, a business that hasn’t sold.
• The business purchase price changes at the last minute with stock valuations or working-capital adjustments.

Whatever the cause, the first step is the same: ask your solicitor or conveyancer for the exact shortfall, including every adjustment, and the settlement date and time.

What’s realistic before settlement?

Property-secured business lending is designed for exactly this.

Days to settlement	Realistic options	Notes
One	$20k – $250k possible same day with simple security	Very tight; solicitor must be ready
Two to three	Property-secured up to $5m, possible within 24–48 hours	Caveat or second mortgage common
A week or more	Time to compare first mortgage, second mortgage or caveat	Look at the exit carefully

The security is usually another property you own — residential or commercial — rather than the one you’re buying, because the incoming lender typically takes first mortgage over that.

Once you have the shortfall figure, send your enquiry or ring 1300 752 188.

What to have ready when you call

1. The shortfall figure from your solicitor, with a settlement statement if one has been prepared.
2. The contract showing the settlement date and any penalty provisions.
3. The security property — address, owners, approximate value and current loans. See property details.
4. Your solicitor’s details — the lender’s solicitor will need to coordinate. See getting your solicitor ready.
5. ID for every owner and director who will sign.
6. Your exit — refinance, sale of another asset or business income. See exit plans.

How does the money join the settlement?

This is where coordination matters. Settlement funds usually need to be available through the settlement process, not sitting in your bank account. In practice, the lender’s solicitor works with your solicitor so the shortfall funds are paid in at settlement — either directly or into the right trust account beforehand. The more notice both solicitors have, the smoother this goes.

What about stamp duty?

Duty is often part of the gap. Each state’s revenue office sets its own rules on how much is payable and when. Your solicitor or conveyancer will know the rules for your state; check them early, because duty timing can turn a manageable gap into an urgent one.

Can’t you just ask for an extension?

You can ask, but don’t plan on it. Depending on the contract, a vendor may be entitled to charge penalty interest, issue a notice to complete, or in some cases terminate. Some vendors will agree to a few days; others won’t. Treat an extension as a fallback, and fund the shortfall in parallel.

An illustrative shortfall

Illustrative example only. A physiotherapist is buying the clinic premises she leases, with settlement in nine days. The bank’s valuation comes in $85k below the price, and her loan is reduced accordingly. With duty and adjustments, her solicitor confirms a total shortfall of $112k.

She owns a home with plenty of equity and an existing mortgage. A second mortgage needs her bank’s consent, so a caveat over the home is arranged instead, settled with three days to spare. The facility is repaid eight months later when she refinances the clinic premises.

What should the exit look like for a shortfall loan?

Settlement shortfall funding is usually short-term, so the repayment plan matters as much as the property. Common exits include refinancing the shortfall loan into a longer-term facility once the purchase has settled and the property can be revalued, selling another asset, receiving funds from a delayed sale, or repaying from business income over a set period.

Whatever yours is, write it down in two or three sentences with realistic dates — see exit plans — and check the loan term fits it with room to spare. If the plan is to refinance with a mainstream lender, it’s worth having an early conversation with that lender before you settle, so you know what they’ll want to see and how long it will take.

Who should you tell first?

Your solicitor or conveyancer, then your incoming lender, then the Deadline Desk. Each needs to know about the gap as soon as it appears, so nobody is surprised a day before settlement.

Close the gap before settlement day

Settlement won’t wait, so the earlier someone looks at your gap, the better. Asking what’s possible involves no credit check. Your enquiry stays with one team — no blasting your details around the market — and a real person calls you back.

Please be exact on the enquiry form: the shortfall figure, settlement date and the property you’d offer as security. Accurate answers are what let us line up funding that lands with the settlement. Or ring 1300 752 188.