You looked for months for the perfect property to buy, attended inspection after inspection and finally secured your dream property. Now it’s time for settlement day.
There’s no denying it, the feeling of buying a property is pretty great. While by all means crack open the champagne and celebrate your dream property, keep in mind you still have to make sure you dot your Is and cross your Ts.
From arranging insurance through to booking in removalists, there’s a lot organise when buying a place with one of the key things being settlement day.
Here, we take a look at what settlement day is, what happens and what you need to do.
A property settlement is the official process conducted by the legal and financial representatives of both you and the seller.
While the length of the settlement process varies from state to state, it can take anywhere between 30 and 90 days.
The length of time a property settlement takes will likely in part be determined by the time it takes your bank to sign off on your mortgage.
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.
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.
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.
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.
Once the documents have been signed by both parties, they’re sent to the titles office to register you as the new owner of the property.
According to conveyancer, Jo Richmond from Law554, the hardest part of settlement day for her clients is packing up and cleaning the home and disconnecting and connecting the utilities. “We take care of the paperwork so they can get on with the cleaning,” she says.
“Probably two weeks out from settlement we’re trying to finalise our figures in relation to council and water rates.
“We write to the council and water authorities advising them of a change of ownership, but [clients] have to ring up and get their gas and power connected.”
You should also 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.
You don’t actually need to be present on settlement day, as your representatives can take care of all documentation and financials. However, you will need to oversee the removals process.
After the settlement meeting, your settlement agent will notify you the settlement has been finalised and the money has been received.
After the meeting, your lender will draw down your loan, debiting the amount they’ve paid at settlement from your loan account.
Richmond says she sends a final reporting letter to her clients after settlement, to inform them that settlement was completed and the money was received on their behalf.
“We also write to the authorities advising them of the change in ownership. Where there is a bank involved, the bank will report a breakdown of the loan distributions.”
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.
After the property settlement, there’s not much to do except enjoy your home.
Your conveyancer/solicitor may send you a final report of the settlement details and you may also receive confirmation from your lender, including details on your loan amount and repayments.
While it is no secret cracking into the property market is tough right now, this report can help buyers identify regions that have the most affordable homes in each city and region across the country. Click here to read more.
So how can you get into your own place as quickly as possible while still paying the rent? We asked a financial adviser for his tips on what renters can do to increase their chances of buying. Click here to read more.