You’ve searched online and attended umpteen inspections until you finally found the house you love. Your offer gets accepted, the property becomes unconditional and now you are counting down the days until settlement. It’s the light at the end of the tunnel after protracted negotiations and tumultuous back and forths. And the good news is the difficult work’s done for you.
Here are six simple tips to guide you through the property settlement process.
- Learn what property settlement is
Property settlement is the legal process that transfers the ownership of a property from one owner to another. The balance of the sale price is paid and usually conducted by your legal and financial representatives and those of the sellers.
The settlement date is agreed to in the contract, with most scheduled between 30 and 90 days from the contract date.
- Arrange your pre-settlement inspection
A seller must hand over the property in the same condition as when it was sold. A good way to ensure the vendor is on course to meet this obligation is to inspect the property in the time leading up to settlement.
You should inspect the property 2–3 days before settlement. Make sure it’s still in the same condition as when you signed the contract. In particular, check anything you specifically included in your contract.
Ask your solicitor if all other conditions of the contract have been met before settlement day.
- Organise building and contents insurance
In Queensland, the property is at the buyer’s risk from 5:00 pm on the first business day after the Contract date. You should immediately contact your insurance broker or arrange a cover note of insurance for the property immediately after you have signed the Contract. Although you have until 5:00 pm on the first business day after the Contract date, you should be careful to arrange this insurance cover immediately.
- Check measurements
Your solicitor will send you a plan of the land as you can ensure measurements and boundaries correspond with the Certificate of Title. You should let them know if they do, and alert them to the face if they don’t.
It’s important you provide documents and other information to your solicitor promptly, as delays can be costly.
- Apportion outgoings
The solicitors acting on behalf of the seller and yourself will need to work out the share of rates and other charges each party must pay.
While the seller is responsible for rates up to and including the day of settlement, you as the buyer and new owner are responsible from the day after settlement.
The exact amount you will be held responsible for will be laid out in what is known as a settlement adjustment statement.
This adjustment statement will also outline how much land transfer duty (also known as stamp duty) you will need to pay on the sale. Depending on the state in which the property is located, you will be given anywhere between 28 days and three months after settlement to pay this duty – although it’s important to note that you cannot receive the title to your home until you have paid it.
- Understand what happens on settlement day
Your lender and settlement agent (conveyancer/solicitor) are the ones in the driving seat on settlement day – so much so that you don’t even need to be there.
They will meet the seller’s representatives to sign and exchange the final documents of sale, with each of them responsible for certain set tasks.
Your lender will register a mortgage against the title of your new property and provide the funds to purchase the new property, and your solicitor or conveyancer will need to check that any rights of third parties have been removed or released, that the existing mortgage on the vendor’s title has been discharged, that all clauses on the sales contract have been fulfilled, and that the property and mortgage transfer is registered with the relevant titles office.
Once that’s all done, your lender will debit from your loan account the amount they paid at settlement, and then you’ll need to pay the land transfer duty.
After that, you’re free to pick up the keys and move on in.
