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What happens on Settlement Day?

'Settlement' is the legal process of transferring ownership from the seller to the buyer (you). It’s the very last step in the house-buying process conducted between your legal and financial representatives and the seller's representatives.


Just like any big day, the end of settlement can either get you excited or stressed out.


Amongst the many items on your to-do list for settlement you need to ensure that you have sufficient funds to effect settlement.


This is likely the biggest purchase of your life so you will be motivated to ensure that everything runs smoothly. If you are getting finance to purchase the property, your bank will be the gate keeper for the settlement process. They will need to be ready to settle in order to advance the funds to you so that you can purchase the Property.

Your bank will require you to sign loan documentation before settlement, therefore, it is really important that as soon as you have received finance approval you keep following up your bank for loan documents and to check on the progress of your loan, to ensure that you will be ready to settle on the settlement date. Alternatively, if you wish to use the services of a mortgage broker then this important task will be done for you.


Time Line for property settlement?


Settlement day is the day you assume legal ownership of your home.


It is important to have a solicitor or a conveyancer available to ensure that you handle this complex process correctly.


The specific date of settlement will be outlined in the sales contract, and the settlement period may range from 30 to 90 days or longer, depending on what is agreed upon by you and your seller.


The settlement day process involves your settlement agent (solicitor or conveyancer) meeting with your lender and the seller’s representatives to sign and exchange the final documents of the sale. They will also organise for the balance of the purchase price to be paid to the seller.


What should happen prior to settlement day?


During the days or weeks leading to your settlement day, there are a number of things your conveyancer will have to do, first of which is analysing the contract of sale.


The solicitor will make sure that there is an ample amount of time between the financial approval date of your mortgage and the proposed date of settlement. Additionally, the solicitor will check all clauses and make sure that each is being met by both parties.


Your solicitor will also conduct a background check on the property to make sure any existing mortgages for the property are already settled. The solicitor will also see to it that there are no debts legally held against the property.



What preparations are needed before the big day?


There are a couple of things you will have to accomplish before you can settle down in your new home. On top of the list is inspecting the property yourself to guarantee that everything is in its place and in good condition.

Before settlement day, it’s imperative you inspect the property so you can ensure that:

  • There’s been no damage to the house since auction day.

  • You are receiving the property in the same condition as it was sold to you

  • You check that the items included in the sale have been left at the Property

  • You check that the Property is vacant (if this is a requirement under your contract);

  • You check that all special conditions in the contract or items that were negotiated to be fixed as part of your Building and Pest Inspection have been finalised (if any)

  • You check that all fittings, plumbing, electrics and gas appliances are all working.

  • You check that all the property has been cleaned and there is no rubbish.

  • You check that the garden is well presented and no plants have been removed (unless otherwise stated in the contract of sale).

This is also the time to seek out building and contents insurance, which should ideally take effect starting from the purchase date.


The most important to-do on your list is to ready your finances. On settlement day, you will be paying the initial deposit on your home, as well as other fees like stamp duty and lenders mortgage insurance (if applicable).

What happens on settlement day?


On the settlement day, your solicitor or settlement agent will meet with your lender and seller to exchange legal documents. Ideally, you and your seller can opt to not attend the meeting, as all the tasks needed to be accomplished will be taken care of by your representations.


The representatives for parties, alongside the lender, will organise the funds needed to purchase the property. The lender will register a mortgage against the title of the new property and will provide the funds to be paid to the seller.


The purchase price of the property could be readjusted during the process to allow for expenses that have already been paid. For instance, the buyer may have to compensate the seller for council rates if the latter paid for them in advance. This could also apply to payments for water and corporate fees.


The buyer's solicitor will then check if the current mortgage on the title to the vendor is settled and if any third party who has the rights to the property is removed. If you are the buyer, this means that your solicitor will receive, on your behalf, the property title and will officially register you as its new owner.


It will also be your responsibility to pay the land transfer duty. Once this is done, the title of the property will be officially transferred to you.



Where are the pitfalls?


While hiccups rarely happen prior to settlement day, there are still factors which can delay the process.


Some situations that you may encounter are missing documents, no-show conveyancers, delayed cheque issuances, and other unforeseen circumstances that may affect you financially.


Financing is the most important thing to in the settlement process, so it would be wise for you to build a buffer when settling on a settlement date to ensure your stability.

The key here is to be prepared and ready to avoid things going off track.


What happens the days and weeks after?


After the settlement, your lender will debit the amount they have paid at settlement from your loan account. Additionally, your lender will send you a confirmation of your loan amount and repayments.


Once settlement has bee finished and the keys have been released, you can begin the process of moving into your new home and (hopefully) settling into your dream house.


Even with the right advice and loan guidance, property purchases can be a stressful. My Finance Agent can provide you help to ensure you have the best possible understanding of whats involved. Talk to one of our team on 02 8313 8400 to get started or visit our first home buyers page for more information.


*Information within this publication has been sourced from NSW Fair Trading, Realestate.com.au and MeBank.com.au.

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