What is Settlement?
We’ve all heard the term, but if you’re a first home buyer what does settlement of a property actually mean and entail?
Property settlement is when ownership of a property passes from the vendor (the seller) to you (the buyer). It’s a legal process facilitated by your legal and financial representatives (your Conveyancer and Lender respectively), together with those of the vendor.
The actual date of settlement is agreed by both parties and detailed in the Contract of Sale. Settlement periods are normally between 30 to 90 days, but they can be longer or shorter depending on what you negotiate with the help of your Conveyancer.
Preparing for Settlement
From the outset, the most important thing is to enlist the services of a professional Conveyancer to act as your agent through the settlement process. A Conveyancer is a licensed professional whose role is to cover all the legal requirements when it comes to buying your home. He or she is there to advise and guide you through each step of the settlement process, including:
- Review the contract
Your Conveyancer will thoroughly review the Contract of Sale with you to ensure you are clear on what is included in the sale. The contract is then signed and dated with the settlement date as agreed with the vendor.
- Arrange final inspection
This is your last chance to properly inspect the property before you legally own it. The vendor must hand over the property in the some condition it was when you committed to purchase it. In most cases this will occur during the week before settlement and will be organised by the vendor’s agent.
What happens on Settlement Day?
The big day has arrived for settlement to be finalised by both parties. Where the event used to take place physically, with your Conveyancer meeting with your lender and the vendor’s representatives (usually at the vendor’s bank), it now all happens much more conveniently via a dedicated online system called PEXA. In reviewing all documents, your Conveyancer will ensure that:
- Any existing mortgage on the title to the vendor is discharged.
- Any third party or person who has rights over the property (known as a caveat) is removed.
- All clauses on the Contract of Sale are fulfilled.
- The transfer of land and mortgage is registered with the Titles Office in your state or territory.
Your lender will register the mortgage and your name on the title of the property, and provide the funds or the balance of the purchase price to be paid to the vendor.
The settlement is official! You’re now free to collect the keys from the vendor’s agent and take possession of your new home!
If you’d like to find out more, talk to one of our Expert Conveyancers today. Call 1300 My Expert (1300 693 973).
Disclaimer: The information provided in this blog is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this blog you should consider the appropriateness of the information having regard to your objectives, financial situation and needs and it is important for you to consider these matters and to seek appropriate legal, tax, and financial advice.
Pinnacle Advisory Pty Ltd. Trading as My Expert Wealth ABN no 36 638 505 950 is a corporate Authorised Rep of MG Wealth Advisors Pty Ltd AFSL n. 496089 ABN no. 20 617 338 137.