You’ve exchanged contracts with the seller and paid the deposit on your new home. Before you can move in and start unpacking, there’s still the final property settlement to take care of.
Read this guide to find out what to expect on settlement day, what you should take care of beforehand and what happens next.
Property settlement is the legal and physical transfer of ownership of a property from the seller to the buyer. This normally occurs after contracts of sale have been signed and all their conditions met.
Most home buyers and sellers use the services of a conveyancer or solicitor to guide them through the settlement process and help with the paperwork. Your mortgage broker can also explain what’s involved and what to expect.
The settlement period is the time between when you exchange your contracts and take ownership of the property. Depending on where you live, this could be anywhere from one to four months after contracts are exchanged, but the average settlement period in Australia is four to six weeks.
The date of property settlement will be set by the seller in the contract of sale. If you prefer a different settlement date, you or your legal representative can negotiate this with the seller. If settlement is delayed, this may involve penalties.
Before you’re ready for property settlement, you need to make sure you have:
Before making an offer on a home, it’s recommended that you organise a thorough inspection to make sure the property is being sold as described in the contract and that all fixtures, fittings and utilities are present and working.
Things to check include:
You will have a chance to conduct a final inspection just before settlement. Depending on the risks where you live, it may also be prudent to organise other inspections such as a termite inspection.
When you and the seller have agreed on a price, and the conditions of the sale have been met, you can sign and date the contract of sale. This is also usually the time you pay the deposit on the home.
After contracts have been exchanged, you will usually have around five business days during which you can decide to withdraw from the sale if you change your mind. This is known as the cooling-off period, and it can vary by state and contract.
There will be a penalty involved for cancelling your contract, which is usually calculated as a percentage of the sale price. There is no cooling-off period if you purchased your home through an auction.
On the settlement date agreed in your contract of sale, you will take legal and physical ownership of your new property.
Before you receive your keys, your mortgage lender will pay the remaining sale price and your solicitor or conveyancer will meet with the seller’s representative to take care of the final paperwork and transfer the title to your name.
Property settlement can be complex, but your legal representative will usually take care of the process on your behalf, including liaising with your bank or mortgage lender.
They will provide you with any receipts and advise you about any remaining expenses that need to be paid or documents that need to be completed.
In most cases, all you have to do is sign off and receive your keys from the selling agent.
You may be entitled to carry out a final inspection of the property before settlement to check that it’s still in the same condition as when you signed the contract. This can sometimes be done on the day of settlement itself, or as close to settlement as possible. This is to check for major differences (such as a hole in a wall or missing fixtures or appliances that were in the contract of sale).
If there are any problems with the property, you may be able to postpone property settlement until they are addressed or to negotiate appropriate compensation with the seller.
Once property settlement is complete, you will be the registered owner and given the keys and title deeds for your new property. You will be ready to move in and will start making repayments on your home loan as agreed with your lender.
You may be required to pay land transfer duty or stamp duty on the day of property settlement or within 30 days after. How much you have to pay varies depending on where you live in Australia. If you are a first home buyer, you may not have to pay stamp duty or may be able to claim a rebate.
You will be responsible for the payment of council fees and other fees related to the property starting from the day after settlement.
You can normally collect your keys from your agent and move into your new home after settlement is complete.
It may be possible to arrange a move-in date prior to settlement, if the seller agrees and this is specified in the contract of sale. If the seller is still resident in the property, they may be able to remain until the following day.
If you want to know more about property settlement or other stages of buying a property, our home lending advisors can give you expert advice and help you find the best possible deal on your home loan from our panel of lenders.