Between the agents, the jargon and the frustration of 'Expressions of Interest' ads, searching for your first or next home eventually does reveal its fun and stimulating moments.
You've decided, had your offer accepted and commenced the tedious yet thrilling purchasing journey. Settlement day is that long-awaited light at the tunnel's end, where the rigmarole concludes and excitement begins.
But what actually happens during property settlement? Do you know what's required of you as the buyer to wrap things up?
Let's delve into what happens on settlement day and how to prepare for the final stage before becoming a proud homeowner!
What exactly is 'property settlement'?
What happens on settlement day is relatively straightforward and effortless.
Put simply, settlement is the closing procedure arranged and actioned by a legal representative of each side of the property's purchase transaction (buyer and seller).
Each state's property settlement regulations vary, with most processes taking 1-3 months before calling the home yours.
Financial institutions and their procedures are the most significant contributing factor in determining time frames for which property settlement is likely to take.
Settlement Day – What's Involved
The proposed settlement date is when the property officially becomes yours, providing no unforeseeable complications on either side arise.
Your conveyancer, your lender and the vendor's solicitor will meet at an agreed location on settlement day. They'll complete the ownership exchange and arrange for the purchase balance to be transferred.
Depending on the complexity and circumstances surrounding the purchase, here's how things transpire with a successful, 'hiccup-free' settlement day:
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The lender pays the balance – Your bank requires all remaining funds at this stage to finalise the purchase. They'll ensure the seller receives payment when it's due and will be overseen by your conveyancer for a hassle-free transaction.
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Seller receives the balance – The vendor is notified of the successful funds transfer and will confirm they've received full payment.
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The signing of the paperwork – Usually, all required documentation is in order and ready for signatures by this stage. The three parties collectively confirm everything's been properly actioned. The titles registry then receives the documents, officially filing you as the new owner.
Top Tip: Remember you'll be responsible for council rates, body corporate fees etc., immediately the following settlement. It might be worth discussing the additional, sometimes hefty costs you could be up for straight away, depending on when payments are due.
Preparing for Settlement – Things to Remember
While what happens on settlement day is essential, knowing what should be prepared before it can make a move-in date significantly smoother.
There are two oftentimes overlooked things most buyers won't think of amidst the emotion and anticipation of a property purchase:
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Organising a final inspection – Make sure you take one last tour of the property to confirm it's in the same condition you agreed to purchase it in. Your agent can usually conduct this on your behalf should you be unable to make yourself available.
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Arranging utility connections before moving in – Spending multiple nights in your new home without electricity, gas, internet, or other utilities can be a real dampener on the experience. It's not that newbie homeowners expect this to be organised for them, but rather something quickly disregarded throughout more immediate requests from agents, solicitors and lenders.
In addition to these, you should also arrange for the remaining funds to be readily available a significant time ahead of the settlement date. Penalties could apply for settlement delays caused by the buyer or parties on your end for late cooperation or other reasons.
We'll discuss possible reasons for settlement delays in the next section below, alongside what you can do if you encounter any unexpected 'speed-bumps'.
Other Important Considerations About Settlement
Another vital aspect to consider (especially for first-time homebuyers) is that you'll need to account for the likelihood of a possible settlement day delay.
Banks, agents, vendors and solicitors don't always seamlessly integrate as well as you'd expect during property purchases. It's common for lenders to fall behind on finance finalisation, particularly in instances where:
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Buyers have proposed extremely short settlement dates when submitting offers
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The settlement is scheduled to take place over extended holiday periods (generally Christmas or Easter, where consecutive public holidays complicate communications and bank processes)
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Information regarding buyer-seller agreements isn't yet finalised, clarified or confirmed.
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A last-minute finance/loan restructure must be arranged due to initial over evaluations or other miscalculations.
Whilst the above mentioned is rarely the case, keep in mind such circumstances can and do occur. A streamlined, stress-free settlement is what every buyer hopes for, but familiarising yourself with possible problematic scenarios can also eliminate opportunities for further issues.
All this means is that you'd have to contact your solicitor, requesting an extension on the originally agreed-upon settlement date. You'll be notified once the seller agrees, and settlement will proceed the same, only now at the later-scheduled date.
Clearing of Funds
Following what happens on settlement day and notification from your solicitor of the finalisation, the bank then executes your loan and requirements for scheduled payments to begin.
Don't forget that your stamp duty and land transfer duty must be paid by settlement day too. Titles can only be registered following successful payments of these fees.
As soon as funds have cleared, you'll be advised with timeframes varying between individual purchases. This generally happens within a few days of settlement.
Do I actually own my property now?
Congratulations! You've just bought a home!
Upon receipt of the funds by the vendor and title documentation by the titles office, it'll be time to pick up your keys from your agent and plan a celebration.
Months of inspecting, comparing, negotiating and navigating pesky documentation have now paid off, and plans for tenants or occupation are likely next in the works.
Anything else?
Zilch! Take a breath and enjoy that delightful, long-promised sense of accomplishment you've been convincing yourself would come soon.
You'll likely hear from your conveyancer one last time, providing you with settlement confirmation details while receiving mortgage information from your lender. But that's it for the boring stuff.
Now the fun really begins!
Grab the keys, organise your removalist and set up your new home.
Happy homeownership!