Property Settlement Process Before Buying Your Home
If settlement day is giving you jitters, it's about time you identify the process and feel confident to face the day. And it won't be long before you start unpacking in your new home. A dream come true, Yeah?
What is a Property Settlement?
Property settlement is a legal process enacted by your legal and financial representatives along with the seller. When the ownership is passed from the seller to the buyer and the buyer pays the sale price balance, it is called property settlement.
The onus is on the seller to decide on the settlement date in the sale contract. Property settlement periods are usually set to 30 to 90 days as a general rule. Depending on the circumstances, the period can be extended or shortened.
Know What Happens on Settlement Day
Settlement day is a day of hustle. On this day, your solicitor or conveyancer (settlement agent) sees the seller representatives and lender at the pre-arranged place and time. They exchange documents and ensure all formalities are on paper. Paying the balance of the purchase to the property seller ultimately leads to the transfer of title.
Your lender’s responsibilities on the day:
- To facilitate the funds to purchase the new property
- To register a mortgage against the title of the new property
Your settlement agents’ responsibilities on the day:
- To discharge any existing mortgage on the title to the vendor
- To remove any third party or person with rights over the property (a caveat)
- To ensure all clauses in the sales contract are fulfilled
- To register the transfer of land and mortgage with the title office in a particular state or territory
Preparation on Settlement Day
A few tips to make settlement day as smooth as possible can be of infinite assistance to you. On the day, be prepared and make sure:
- You have arranged for a conveyancer or solicitor to be your agent in the settlement process
- You have signed the sales contract dated with the correct settlement date (agreed to by both you and the seller)
- You have managed all the balances needed to complete the sale (it should cover lenders mortgage insurance, stamp duty and other fees and charges)
- You have organised content insurance and building effective from the date of purchase
- You have already completed a final inspection of the property
Final inspection before settlement
You must conduct a final inspection of the property just before the settlement. The morning of the settlement or the day before is the best time to do so. Contact the agent for arranging the final inspection.
The seller has the responsibility to hand over the property in the same condition as it was when the property was sold. Check the following at the time of the final inspection:
- If the hot water system, appliances, heating and cooling are in place and working correctly
- If the walls, windows, structure, light fittings, and floor coverings are in the same condition as when the property was sold to you
- If the locks, keys and automatic garage door controls are in working condition
If you plan to buy a new home, ensure all the work is completed and the appliances are installed and functioning correctly. If you want to get professional assistance, organise a defect inspection with a building inspector.
The lender will draw down on your loan after settlement. The balance amount has to be paid at the time of settlement from your loan account. Stamp duty is usually paid on the settlement date and it will now be your obligation to pay land transfer duty or stamp duty after this date. The title of the property is only be transferred to your name after you have paid the duty.
Do you know the seller’s responsibility includes paying the rates and other council fees up to the date of settlement? After the title is transferred to the new owner, he is responsible for paying these costs. After the settlement is reached, it’s time to collect the keys from the agent and take possession of your property. Now you are the owner of your new home!
Settlement and, for that matter, any process related to property transaction can be a complicated process, but should not bother you. Professional assistance from real estate agents in Melbourne can make your life easier. Jasmine Real Estate is a reputed property agency with intimate knowledge of the residential market in Melbourne's South East and the inner city. Talk to our experts on: