If you are buying or selling a property, the settlement period is when you will deal with finances and paperwork to legally transfer ownership of the property. Your financial and legal reps will handle the hard stuff but knowing what is involved is key to a smooth settlement. Here we guide you through it.
The length of the settlement (typically 30-90 days) can either be outlined in the contract of sale from the outset or negotiated by the buyer or seller before signing the contract.
If you are a seller and still looking for a new place to live, you might want to negotiate a longer settlement period. On the other hand, buyers may also have certain parameters, such as a settlement before Christmas or the start of the school year.
Negotiating the right settlement duration is all about what works for both parties.
Leading up to settlement day
Once the settlement period begins, you can expect a lot of activity.
First, the seller’s solicitor or conveyancer will contact them to fill in forms agreeing to transfer land, pay stamp duty and inform buyers of any encumbrances that exist on the title – for example, if there are restrictions on the use of land.
The conveyancer will also go over the contract, get the cheques ready and ensure any existing mortgages on the property are paid off.
Before settlement, buyers also generally check out the house one final time. This typically happens in the week before settlement day and is arranged by the seller’s agent.
On top of doing a final house clean, sellers can go the extra mile by leaving behind manuals for appliances, listing paint colours and passing on any other tips to help the new owners.
Settlement day is a much-anticipated day when you can finally take ownership of your new home or move on to new pastures.
A lot happens at settlement – much of it behind the scenes. Usually each party’s settlement agent (solicitor or conveyancer) will meet with representatives from the lenders (usually a bank) to exchange documents.
What usually happens is:
- The buyer’s mortgage comes into effect and the seller receives the remaining balance of the house price, usually 90%.
- The buyer’s conveyancer officially receives the property title and registers them as the new owner.
- Cheques are exchanged and the seller can claim the deposit from their agent.
- Any outstanding paperwork and payments, such as stamp duty and council rates, are signed and sorted.
- The keys are handed over and the property is officially sold!
What happens if it doesn’t go according to plan?
If you have engaged experienced professionals to help you with settlement, then setbacks are rare. On occasion, however, there may be issues such as delayed finance, missing signatures or concerns with the final property inspection. However, a good conveyancer will take it on themselves to do everything they can to rectify any problems quickly.
Once everything is signed, sealed and delivered you will be free to move into your new home or begin your next adventure.