Get ready for a landmark day in your journey to owning a home and find out what happens at settlement.
You’ve booked the removalists and you’re all set to collect the keys and begin a new life in your very own home. But if you’re not prepared for every step of the property settlement process, you could find yourself delayed by unexpected legal, practical or financial issues.
What is settlement?
Settlement is the process of signing and lodging all necessary documents to confirm you as owner of your new property, and transferring the balance of the sale price to the vendor. It happens at an agreed time on a day written into your contract of sale.
Your legal representative and financial institution will work together to prepare all the necessary paperwork, but it’s wise to have your own checklist (see below for suggestions) to work through well before settlement day arrives.
Setting a date for settlement
The standard settlement period is between 30 to 90 days and varies from state to state. In many cases, both buyers and vendors will agree on a settlement date that works for everyone. It’s usually up to the real estate agent, or legal representatives for both parties, to negotiate the settlement date before the sale is agreed and contracts are signed and exchanged.
If you’re buying at auction, the settlement period will be part of the contract and may not be up for negotiation. Be sure to check if the date is going to work for you and your situation before you commit to bidding.
Preparing for the property settlement process
When you’re agreeing on a settlement date, bear in mind your lender will need time to process your unconditional loan approval and prepare any mortgage documents. Make sure you go through all documents with your conveyancer and sign or initial all the relevant pages. A missed signature could mean not having paperwork ready in time, causing costly and inconvenient delays.
With a good conveyancer on board, you’ll have all your legal documents ready and searches completed well ahead of settlement day. They’ll also communicate with you and your bank to make sure you have all the funds available to meet your settlement costs – including the balance of the sale price, stamp duty, government and bank fees plus any adjustments for council rates, water and utilities.
You won’t want there to be any nasty surprises as you arrive at the property ready to move in with your belongings. So it’s wise to arrange a pre-settlement inspection to check that the property is in the same condition and that nothing has been removed that’s included in the contract. You can contact the seller’s real estate agent to arrange this inspection.
Your lender may require arranging building insurance for your new home from the date you exchange contracts. By the time settlement day comes, make sure you’ve arranged a suitable building and contents insurance policies for your home and possessions.
Once the property settlement process is wrapped up, you’ll be all set to collect your keys, move in and celebrate a fresh start.