What happens on settlement day? What do you need to prepare for?
You have made it to settlement day… now what?
Don’t pop the champagne just yet! Let’s take a further look into this process.
What is a property settlement?
The property settlement period is when you will sort out finances and paperwork to legally transfer ownership of property. The duration of the settlement process varies from state to state, it can usually take anywhere between 30 and 90 days. Your financial and legal professionals will handle the technical aspects, but it is important to know what is involved and what you need to prepare for before, during and after settlement.
What happens on settlement day?
Taking place at an agreed time and place, settlement day is the day you assume legal ownership of your home. 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.
- Bank withdraws funds: On settlement day, you will need to provide the funds to purchase the new property. Your settlement agent (solicitor or conveyancer) will work with you and your lender to ensure the bank transfers the funds to the seller.
- Seller is notified: Once the transfer of the balance of the purchase price of the property has been made, the seller will be notified and confirm receipt of the funds.
- Documents are signed and exchanged: While most of the documents can be prepared prior to settlement day, final signatures and paperwork will be double checked on the day to ensure it has been executed by all parties. If you are not attending in person, it is particularly important to ensure you have signed all documents. The signed documents are then sent to the titles office so you can be registered as the new owner of the property.
What you need to prepare:
You should carry out one final inspection of the property before settlement day. If you can’t do it yourself, or don’t feel confident that you’ll know what to look for, you can hire a professional to conduct the inspection for you. The point of the final inspection is to ensure the house is in the same condition it was when sold. If you are conducting the inspection yourself, make sure that you allow sufficient time prior to settlement to communicate any concerns about the pre-settlement inspection with your legal professional. For example, don’t start inspecting the property at 11am if the settlement is scheduled for an hour later.
Be ready to sort out additional costs that are unrelated to the sale price, such as final conveyancing and legal fees and council rates. Make sure you have all the important documents signed off as required – double check, even triple check to be certain you haven’t missed anything. Get your mail redirected, switch over utilities and change your billing address with your important providers.
You don’t technically need to be present on settlement day, as your representatives can take care of all documentation and financials on your behalf. It is however important to be across the process. Things also may be affected depending on Covid-19 restrictions.
What happens after settlement day?
After settlement, your lender will draw down on your loan. This means that they’ll debit the amount they’ve paid at settlement from your loan account. You’re then responsible for paying land transfer duty or stamp duty. It’s usually paid on the settlement date. The title to the property won’t be transferred to your name until you have paid this duty. Once the funds have been transferred and the paperwork sent off to the titles office to register you as the new owner of the property, you will receive the keys to your new home.
A lot of people move into their new homes on the settlement date. However, sometimes issues arise on the settlement date that cannot be foreseen and unfortunately this can result in settlement being delayed. It is widely recommend giving yourself a few day’s grace and hiring your removalists for a few days after settlement.
Do you have any questions you think we may be able to help you with? Give us a call on 03 5366 1014 or send through an email to email@example.com.
Disclaimer; this blog post has been prepared by a member of Account(able) Finance & Home Loans as an impartial sharing of information. No specific recommendations have been made or implied and in no way is this text to be deemed as individual advice.