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What you need to know about property settlement

Whether you’re a buyer or a seller, it’s important to be ready for settlement. Once an offer on a property has been accepted and any cooling off period has expired, you need to wait for the settlement date to officially take or hand over ownership and exchange keys.

What is settlement?

Settlement is the day when the property transaction is completed and ownership transfers from the seller to the new owner.


The property settlement process is undertaken by the seller and buyer’s solicitors or conveyancers, plus the lenders if mortgages are being taken out or repaid.  


The settlement period starts from the day that the contract has been signed and any conditions attached to the sale have been met. The settlement period is typically 30 to 90 days, but it can be longer or shorter if the seller and the buyer both agree. 


On settlement, all outstanding rates and charges, such as council rates and utility bills for the property, are paid by the seller, and the balance of the purchase price is paid by the buyer. 


The seller receives full payment for the property, and the buyer becomes the official new owner of the property.


On settlement day the seller will: 

  • Pay outstanding rates and bills for the property up to and including the day of settlement. This is organised by the solicitor or conveyancer
  • Receive the balance of the funds after the deduction of all fees, charges and outstanding mortgages
  • Repay their lender any balance owing on the mortgage, usually using the settlement funds from the buyer
  • Transfer the property title to the purchaser through their solicitor or conveyancer
  • Arrange keys to be given to the purchaser, usually through the real estate agent 


On settlement day the purchaser will: 

  • Pay the balance of funds for the purchase, minus any deposit already paid
  • Pay any land transfer duty/tax (stamp duty) owed. Some stamp duty has to be paid before settlement, so it's good to check with your solicitor or conveyancer about timing
  • Become the registered owner of the property
  • Receive the keys and take possession of the property 


How do I choose the length of the settlement?

If you’re selling the property, it's usually up to you to select the settlement date, but this can be negotiated. 


When the terms of the contract of sale are being negotiated, the seller and buyer agree on a date they’re both happy with. Here are some things to consider when choosing your settlement date:


  • If you’re moving into a new house, how long do you need to comfortably pack up your things beforehand? Give yourself plenty of time to get ready.
  • Are there any special conditions on the contract that need to be satisfied that may take time? For example, do tenants need to vacate the property? Or has the seller agreed to fix something on the property? Allow time for issues that need to be remedied before settlement.
  • If you’re selling, you’ll need to consider the costs of selling a house when choosing the settlement day so you’re covered.
  • If you’re buying a house before selling, you’ll need to consider the right timing based on your financial situation. You may need to cover your existing mortgage and your new home loan.
  • If you’re selling and purchasing at the same time and you want a simultaneous settlement (on the same day), you’ll need to negotiate the same settlement day for both contracts.


Usually, your solicitor or conveyancer will recommend a settlement period of 30 to 90 days from the date the contract of sale is signed, but some property transactions fall outside of this. Sometimes a longer settlement period is required when the buyer needs to sell their own home. Conversely, if the home is vacant and the buyer is ready to move in, a short settlement can be negotiated. 


Can I change the settlement date after the contract has been signed?

It’s possible to renegotiate the date, even after the contract is signed. Any change needs to be agreed by both parties, then amended and signed on the contract of sale. 


If the seller or buyer doesn’t agree to a change in date from the original on the signed contract, the date will remain the same. 


If you want any variation to what was first agreed on, speak to your solicitor or conveyancer, who can negotiate on your behalf. 


What happens on settlement day?

On settlement day the buyer will take legal ownership of the property. Transfer of property involves a number of tasks, which are usually handled by the buyers legal and financial representatives. 


Here’s what typically happens on the day:

  1. The solicitor, conveyancer or settlement agent, the buyer’s lender and the buyer will sign the final documents of sale. This can be done online or in person. These documents include the adjustment statements, which reconcile rates, such as council and water rates, and stamp duty owed on the transaction.
  2. Both parties will then let the real estate agent know in writing that the settlement process has been completed. Then the buyer can liaise with the agent to receive the keys.
  3. If there’s a mortgage, the new owner’s lender will register it against the title of the property and provide the funds to complete the purchase.
  4. The buyer’s lender will debit the loan amount from their loan account.
  5. Any land transfer tax (stamp duty) owed by the buyer is paid.
  6. The seller’s conveyancer will confirm in writing that funds have been received.
  7. The balance of the purchase price is paid to the seller.
  8. The seller repays any outstanding money owed to their lender.
  9. The new owner of the property is registered with the land title register.
  10. The buyer takes ownership of the property. 


How to plan for settlement day (buyers) 

Here are a few things to check off:


  • You’ve organised finance with your lender.
  • You’ve organised your final property inspection and reported any issues to the vendor.
  • You have a conveyancer or solicitor acting on your behalf.
  • You have enough finance to cover land transfer tax (stamp duty).
  • You’ve organised building and contents insurance to cover you from the day of settlement.
  • You’ve received a settlement adjustment statement which includes the amount of stamp duty you’ll need to pay, and the First Home Owners’ Grant if relevant.
  • You’ve organised removalists, packed up your belongings and cleaned your house.


Do I need to be present on the day? 

Your solicitor or conveyancer will organise the transfer of the property and will liaise with your lender and the other party’s solicitor or conveyancer to arrange the transfer of funds and transfer of ownership of the property.  


You’ll need to sign the documents of sale, which can be done in person or online. You will also have to organise the handover of keys with the real estate agent or vendor (if it’s a private sale) once the sale is completed.


What happens after settlement?

Once the property purchase settles, the buyer:


  • Will be sent the full property settlement details with a statement of adjustment showing how the funds were distributed.
  • Will get confirmation from their lender on their home loan and information about their repayments.
  • Can pick up the keys and move in! 


If you’re looking for your next home, we’re here to help – we can talk to you about purchasing a home and how much you might be able to borrow

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Things you should know

Conditions, credit criteria, fees and charges apply. Residential lending is not available for Non-Australian Resident borrowers.

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness of the information and if necessary, seek appropriate professional advice. This includes any tax consequences arising from any promotions for investors and customers should seek independent, professional tax advice on any taxation matters before making a decision based on this information.

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