What happens at settlement?
For many home-buyers, what happens on settlement day can feel like secret solicitor business.
Of course, it’s the day when the deal is truly sealed. You take ownership of your new home, receive the keys and begin the next chapter of your life.
Settlement day affects buyers in different ways – some are excited about their new beginning while others stress that something will go wrong and their time-dependent plan for moving in will blow up.
Even at this late stage, there are still documents to sign and fees to be paid, such as stamp duty and home lender’s insurance.
While it is the very last step, it’s an important one. Settlement is a legal process in which the ownership of the property transfers to you. It’s not a simple process. It can take between 30 to 90 days to complete, which is why you should hire a solicitor or conveyancer to conduct the work for you.
The key to a successful settlement day is to have your finances in order, and trust that the solicitors or conveyancers – both yours, the vendor’s and the banks – have not been asleep at the wheel.
Common problems that can delay settlement include missing documents, solicitors failing to attend the meeting and funds not being released on time. If there is a delay, you should ensure you have sufficient cash to get you through this temporary hiatus.
Your legal representative begins the settlement process after you pay your deposit. They will conduct a background check on the property to ensure there are no debts or mortgages against it, as these would fall on you when you took ownership. They will also recheck the boundaries and measurement of the land against the Certificate of Title.
In this period, you should go back to the house to ensure that everything you thought was included in the property remains on site.
There are many horror stories of previous owners removing water heaters, air-con units, spas and even rose gardens. So, you want to be sure the property is in the same condition as you when you agreed to buy it. Once satisfied, this is an ideal moment to purchase home insurance from the date of the settlement.
So, here’s what happens on a successful settlement day:
- Your solicitor will meet with legal representatives of the owner and your lender.
- They will finalise funds to purchase the property.
- The lender then provides the funds for your solicitor to pay for the property.
- Final financial adjustments, such as an unforeseen utility bill, are agreed to ensure the exact amount owing is paid to the owner.
- Your solicitor will check with the owner’s representative that their mortgage has been removed from the property title, and there remains no outstanding debt against the property.
- If all is in order, the property title will be handed to your solicitor, who will then register it with the state government in your name and pay any transfer duties.
- The property title will be registered against the mortgage by the lender.
- The keys will be released, and you can move in.
- The next day, you will likely receive notification from your lender of the transfer of funds for your mortgage and the repayment arrangements.