The property settlement process can be confusing.
Let us help you understand and prepare for settlement day.
Don’t
let settlement day stress you out.
With a little understanding and the right
preparation, you’ll be unpacking boxes in your new home before you know it.
What is settlement?
Property
settlement is a legal process that is facilitated by your legal and financial
representatives and those of the seller. It’s when ownership passes from the
seller to you, and you pay the balance of the sale price.
The
seller sets the settlement date in the contract of sale. As a general rule,
property settlement periods are usually 30 to 90 days, but they can be longer
or shorter.
What happens on settlement day?
On
settlement day, at an agreed time and place, your settlement agent (solicitor
or conveyancer) meets with your lender and the seller’s representatives to
exchange documents.
They organise for the balance of the purchase price to be
paid to the seller.
Your
lender will:
- register a
mortgage against the title of your new property
- provide the
funds to purchase the new property.
Your
solicitor or conveyancer checks that:
- any existing
mortgage on the title to the vendor is discharged
- any third party
or person who has rights over the property (a caveat) is removed
- all clauses on
the sales contract are fulfilled
- the transfer of
land and mortgage is registered with the title office in your state or
territory.
How to prepare for settlement day
Here
are a few tips that will help settlement day goes as smoothly as possible. Be
prepared and make sure:
- you’ve contacted
a solicitor or conveyancer to act as your agent in the settlement process
- the sales
contract is signed and dated with the correct settlement date (agreed to
by both you and the seller)
- you’ve organised
all the money needed to complete the sale (to cover stamp duty, lenders
mortgage insurance and other fees and charges)
- you’ve organised
building and contents insurance effective from the purchase date
- you’ve had an
opportunity to complete a final inspection of the property.
Final inspection
Just
before settlement, you’ll have the opportunity to do a final inspection of the
property. Often this is done the day before or the morning of the settlement.
Contact the agent to arrange this inspection.
The
seller must hand over the property in the same condition as when it was sold.
When you view the property for the final time you should check:
- appliances, hot
water system, heating and cooling are in working order
- structure,
walls, light fittings, window and floor coverings are in the same
condition as when you first saw the property
- locks, keys and
automatic garage door controls are supplied and working.
If
you’re buying a new home, make sure all the
work is finished and that the appliances are installed and working.
You can
organise a defects inspection by a building inspector, if you don’t feel
confident checking these things yourself.
What happens after settlement?
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.
The
seller is responsible for rates and other council fees up to and including the
day of settlement, but after this, you’ll need to pay these costs.
Once
settlement is completed, you can collect the keys from the agent and take
possession of the property.
It’s time to move into your new home at last.
We
know that the home loan process can be daunting.
When the time comes, don’t
feel like you have to do it on your own.
Email
us @ propertyloans@realrenta.com and we will arrange
for a lending specialist from our trusted Finance Partner to contact you for a
no obligation discussion.
Jason Gwerder
Wednesday, 13 November 2019
