Settlement day can be an exciting and anxious time, so let’s get familiar with all things property settlement.
What is property settlement?
Property settlement is the legal process of transferring ownership of a property from one owner to another.
In each state, there are regulations and procedures that must be completed before the property can legally change hands.
These legal requirements are complex and that’s why property purchasers and vendors usually engage the services of a conveyancing solicitor to ensure the process is handled correctly, so everything runs smoothly on Settlement Day.
The first step in finalising your property purchase is to line up the services of a reliable settlement agent to be your representative.
Getting ready for the D day
Settlement day, or the day when the sale of a property will be completed, is usually outlined on the sales contract you sign when you agree to purchase the property and leave your deposit.
It pays to get your conveyancing solicitor to look at this contract prior to signing it as the wording will affect the way your settlement is conducted and how settlement day proceeds.
This contract should contain the conditions of the sale and what is included in the sale, what actions are required to complete the sale and who is responsible for them.
Some of these actions will be the responsibility of your settlement agent and some of them will fall to you.
During the settlement process, your settlement agent will:
Inspect the sales contract to ensure it is reasonable and correct – for example, ensure that there is enough time between the finance approval date and the proposed settlement date
Ensure all clauses in the sales contract are met by both parties
Ensure any existing mortgages against the property are paid off
Conduct a title search and ensure that all measurements and boundaries are in line with the certificate of title
Ensure that there are no caveats or debts legally held against the property – like unpaid council rates and so on
Register the transaction with all appropriate authorities
Ensure that all paperwork is correctly completed and filed by both parties in plenty of time before settlement day actually occurs
Work with your mortgage broker so that your lender can organise a property valuation, if required, and get the cheque/s ready or organise the lender’s representative to be at the exchange, where applicable.
Prior to settlement day you should:
Inspect the property to ensure everything is still in good order
Check that the fixtures and fittings outlined in the contract are there and in good working order
Organise building insurance to go into effect as soon as the vendor signs the sales contract
Sign the documentation your settlement agent prepares to facilitate transfer of ownership – transfer of land, stamp duty application, authority to proceed etc.
What happens on the big day?
Settlement day is the big day when your mortgage comes into effect and your lender pays the balance of the purchase price to the vendor.
Other fees and duties payable to the government must also be paid on settlement day.
On this day, your conveyancer will officially receive the property title and officially register you as the new owner.
Cheques will be exchanged and the vendor can claim the deposit from the real estate agent.
Usually these exchanges occur in a meeting between your conveyancer and the vendor’s, and often your lender’s representative will be present – so you will not be required to be present personally.
Once all the paperwork is completed successfully and all the loose ends are tied up, the keys to the property are handed over to you and you can officially take possession.
What can go wrong?
Sometimes, settlement can be delayed because of a variety of factors.
Settlement agents and solicitors can miss meetings, sometimes cheques can be delayed – particularly if you don’t have your financing in place prior to signing the sales contract.
Just to be safe, we recommend that you set your moving-in date to be a few days after settlement day, so you have some breathing space if things don’t go according to plan.
For more property tips visit the blog section of the Naked Real Estate website.