Settlement day is not just a day when you settle on a loan with your bank that you’ve worked hard on; it’s also a day where your dream of owning a property comes true.
We have seen the excitement of our clients receiving the keys to their new home on settlement day. We have made it our business motto to help Aussies achieve their “Great Australian Dream.” There are a few things you need to be mindful of to ensure nothing takes you by surprise on settlement day or just days before settlement.
What is settlement?
Property settlement is a legal process that’s handled by the legal representatives of the seller, the buyer, and the financial institutions. It’s when the ownership of the property passes on to you from the seller.
Having Legal Representative.
A conveyancer or solicitor, who represents you and protects your rights in the transaction, is one of the key players in buying a house and settling. It is crucial to have a legal representative who is trusted, experienced, and qualified.
How to prepare for settlement?
A pre-settlement inspection can be helpful to make sure things are still the same as they were during the initial inspection and signing of the purchase contract. Some of the things you can look for when doing a final inspection before settlement are:
- Damage to the property
When you first go for an inspection of a property and then sign a contract of sale, that’s how the condition of the property is expected to be at settlement.
- What to do if there are damages or defects to the property at pre-settlement inspection?
- Defects in the property that were not there when buyers entered into the purchase contracts can be fixed by the seller. As soon as buyers become aware of any new defects, they should advise their conveyancer immediately to contact the seller about the issues arising from the pre-settlement inspection.
- Waste
Sometimes, when the seller of a house moves out, they leave a lot of waste and garbage behind, inside or outside the house. As buyers were not in ownership of the property at the time the waste was left on the property, buyers are within their rights to request the seller to remove the waste from the property before or after settlement.
- Check Solicitor’s Account Statement/Invoice
Ask your conveyancer for a statement of account showing all upfront costs, including any stamp duty or land tax, water and sewerage bills, council rates, and funds to complete or cover shortfalls. Ensure you have enough funds available to complete the settlement. Some lenders prefer to debit the funds to complete the transaction from the conveyancer’s account, and it’s important that you transfer enough money to your conveyancer’s or solicitor’s account a few days before settlement.
- Avoid getting scammed and make sure you transfer funds into the right account.
In rare cases, it has been reported that scammers have been able to intercept email communications between a buyer and their settlement agent and ask for funds to be transferred into the scammer’s bank account, leaving buyers with hundreds of thousands of dollars in losses. To avoid this, always check the email address and account details and get verbal confirmation from your settlement agent. Read More….
What could possibly go wrong before settlement?
- Funds are not transferred in time and there are not enough funds available to complete settlement which could cause delays.
- Documents not received on time
- Other parties bank not having all documentation finalised
- Documents have been signed incorrectly
- Documents have been prepared incorrectly
- A caveat is lodged within 24 hours of settlement taking place and not detected until the morning of settlement
- The property being subject to an Encumbrance
- Finance approval is late coming through.
Most of the time, any delays are usually caused by the banks either not having enough time to get the file processed or missing something when they are verifying it for settlement.
Luckily, if there’s going to be a delay in settlement due to any outstanding documents, we’d normally find out about it a few days prior. Often, this will mean we can come up with a solution to get the settlement time back on track.
What happens on settlement day?
On settlement day, your lender arranges to pay the balance of the purchase price of the property to the seller, minus the deposit. Your conveyancer or solicitor and the seller’s legal representative exchange all the relevant sale documents on an online platform and transfer the title or ownership of the property under your name. Once the transaction is complete, you’re legally the new owner of the property, and a mortgage is registered in your name against the title of the property. You can then arrange a time with the vendor’s agent to pick up the keys.
When refinancing a mortgage, settlement takes place between the two lenders only.
When the settlement is complete then Happy Days! 😀