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You’ve looked at potential new homes for months, and now finally you’ve found your dream property and your offer has been accepted. Congratulations!
We’ve put together this helpful settlement day checklist so you know exactly what to expect, and what you need to do to make sure the settlement proceeds smoothly.
What Does Settlement Date Mean?
Here are some quick definitions:
Settlement: Settlement is the official legal process where the balance purchase price under the contract is exchanged for various documentation which allows the legal transfer of a property into your name. The settlement is conducted by legal and financial representatives of both you and the seller. It is the final step in a real estate transaction. This will either be a physical meeting of all parties in the location for settlement as noted on the sales contract or could be on PEXA the online settlement platform.
Settlement Date: The settlement date is the day you officially take ownership of your new home and is the date that you and your financier (if you have one) must be ready to settle the contract. This settlement date is agreed upon during the negotiation phase and is defined in the Contract. As the settlement date is not easy to change, you need to ensure that you give yourself and your financier enough time to be ready to settle when carrying out the negotiations.
What Will My Conveyancer Do Prior To Settlement Day?
During the days or weeks leading to your settlement day, your conveyancer will:
- Analyse the contract of sale and make sure that you are aware of the due dates under the contract, and do a lot of work in the background such as conducting searches, preparing documents for settlement and calculating the funds required for settlement, as well as liaising with your Financier and Mortgage Broker
- Will contact your financier and secure a settlement booking for the settlement date and advise you of the settlement booking
- Advise you if we have concerns that your financier may not be able to settle on the settlement date
- Conduct searches and review these to make sure that there are no monies owing to the Local Authority
Settlement Day Checklist: How To Prepare For Settlement Day
#1 Prior To Settlement Day: Prepare the Money Required For Settlement
The most important item on your to-do list for settlement is to ensure that you have sufficient funds to effect settlement.
For you, this is likely the biggest purchase of your life so you will be motivated to ensure that everything runs smoothly. Unfortunately, if you are getting finance to purchase the property, you will be at the mercy of your financier as they will need to be ready to settle in order to advance the funds to you so that you can purchase the Property. Your Financier will require you to sign loan documentation before settlement, it is imperative that you sign these documents as soon as you receive them to avoid delays. Therefore, it is really important that as soon as you have received finance approval you keep following up your Financier for loan documents and to check on the progress of your loan, to ensure that your Financier will be ready to settle on the settlement date.
You will need to work with your solicitor to confirm that your mortgage is ready to go into effect and that your lender is ready to pay the balance owed to the seller.
Before your settlement day, your solicitor will provide you with a ‘settlement statement’, which will outline the calculation of the balance you need to pay to the Seller at settlement. Normally, this includes a deduction of the Deposit you paid to the Real Estate Agent and prorated Rates, Water and Body Corporate charges. They will also advise you of the additional funds you will need to pay to finalise the settlement. This is usually Transfer Duty, Registration Fees, cheque fees and your Conveyancing/Legal Fees.
If you are obtaining finance to purchase the Property, your Financier will normally deduct from the Loan Amount, lenders mortgage insurance, bank fees and registration fees.
If you do not need a loan, there are a number of options available to you to pay the balance owing at settlement. You may decide to transfer funds to your Conveyancing Lawyers trust account prior to settlement or you may decide to prepare the bank cheques yourself. You should discuss with your Solicitor at least one week prior to settlement the options available to you to pay the balance owing to the Seller.
#2 Prior to Settlement Day: Inspect The Property
In the lead up to settlement day, we recommend contacting your real estate agent to thoroughly inspect your future home. Your goals for this pre-settlement inspection are two-fold:
- To ensure you are receiving the property in the same condition as it was sold to you
- To check that the items included in the sale have been left at the Property;
- To check that the Property is vacant (if this is a requirement under your contract);
- To check that all special conditions in the contract or items that were negotiated to be fixed as part of your Building and Pest Inspection have been finalised (if any)
If when you have inspected the Property you have any concerns about the condition of the property, take photos and send these to your solicitor so that you can discuss the options available to you.
Make sure that you give yourself sufficient time prior to settlement to communicate any concerns about the pre-settlement inspection with your solicitor, so don’t inspect the Property at 1:30 pm if the settlement is scheduled for 2:00 pm.
What Happens On Settlement Day?
On settlement day, your solicitor will attend a settlement meeting with your lender and seller to exchange legal documents. Here is a breakdown of what happens:
- Your solicitor and the Sellers Solicitor will agree on the Settlement Statement which reconciles any adjustments that were pre-paid or accrued during the settlement period (such as rates).
- The Seller’s Solicitor will send to your solicitor the ‘cheque directions’. This is how the seller would like the balance owing to be split. They may decide that they want to use the balance owed by you to pay the commission due to the agent, their legal fees etc, so they may ask for multiple cheques to be drawn.
- The cheque directions will then be sent to your financier for them to prepare the cheques for settlement, or if you are not obtaining finance we will advise you of the cheques required for settlement.
At Settlement:
- Your solicitor and lender will give the Sellers’ solicitor the balance you owe on the property.
- The Seller’s Solicitor will hand over the Transfer Documents to your solicitor, this is the document that transfers the property into your name
- If the Seller has a mortgage registered on the title of the Property, the Sellers Solicitor will hand over a release of mortgage
- If a certificate of title has been issued for the Property, this will be handed over to your solicitor;
- Your solicitor will ensure that any third party or person who has rights over the property (a caveat) is removed from the title
After Settlement:
- If you’re funding your purchase with a home loan, your lender will register a mortgage against the title of the new property; and
- The transfer of land will be registered with the title office
Usually, neither you nor the vendor will need to be present at settlement. This process can be handled fully by your solicitors.
Is Moving House On Settlement Day A Good Idea?
A lot of people move into their new homes on the settlement date. However, sometimes issues arise on the settlement date that cannot be foreseen and unfortunately this can result in settlement being delayed. Therefore, we recommend giving yourself a few days’ grace and hiring your removalists for a few days after settlement.
Where do I get the keys?
The most important question of them all!
Once settlement is complete, the normal procedure is that you are free to collect the keys to your new home from the real estate agent. On occasion, these will be available at settlement, you will need to let us know at least a week before settlement if it is your preference for these to be provided at settlement.
Congratulations all the hard work is over and it’s now time for you to enjoy your new home!!!
The settlement process can be intimidating but the Brisbane Conveyancing team are happy to provide helpful advice. Get in touch with Queensland’s conveyancing experts, Brisbane Conveyancing, on 07 3077 6566.