5 key steps to property settlement
Once you've found your ideal property or perfect buyer, there's one final, crucial step before the sale is official: property settlement, whereupon ownership is transferred from seller to buyer. Depending on your state, professionals like conveyancers, solicitors, or even sales agents can manage the settlement procedure on your behalf, but when you’re buying or selling such a major asset it also pays to understand the process for yourself.
Arm yourself with an in-depth understanding of this crucial final stage of a sale with our overview of the five key steps to property settlement.
The settlement date is set
The settlement process starts on the day the contract is signed and concludes on ‘settlement day’ when ownership officially changes hands. The date of this is set out in the contract - usually six weeks after contract exchange - but can vary depending on what the buyer and vendor agree to.
On settlement day the buyer must pay the seller all outstanding costs to ‘settle’ the purchase of the property; failure to do this on time may result in interest being charged.
Preparing for settlement
In the lead-up to settlement buyers must have all their finances in place, and sellers ready with all their legal and handover documents.
Depending on which state the property is in, the risk of damage to the property passes from the seller to the buyer at different times. In South Australia, Tasmania, Australian Capital Territory, and Queensland, the buyer is responsible for any damage before settlement upon the exchange of contracts. In New South Wales, Victoria, Western Australia, and Northern Territory, the buyer is responsible for any damage on settlement. Make sure you understand your state’s rules and organise home insurance accordingly.
The buyer conducts a final inspection
In the week before settlement (or even on the same day) the buyer inspects the property to check its condition hasn’t changed since the contract signing, specifically that:
- It is reasonably clean and hasn’t been damaged or changed
- Appliances, fixtures and fittings are in working order
- All furniture, rubbish or building materials have been removed
Keep your representative abreast of your final inspection - they can advise what to look out for and what to do if you notice any problems.
The final payment is calculated
Before settlement, your representative will prepare a pre-settlement adjustment statement outlining the final amount to be paid, including applicable buyer concessions/grants and any bills (i.e. water/council/strata) a vendor pre-paid and any portion that should be reimbursed.
Always check this statement carefully before instructing your representative to proceed to final settlement.
And now for the final (and most exciting) part of the process - settlement day! Buyers and sellers typically don’t attend the settlement in person, and are instead represented by their solicitor/conveyancer/agent. Final settlement involves several key steps:
- The buyer’s payment is transferred to the seller’s representative who prepares the signed transfer documents (ensuring any third-party rights over the property e.g. mortgages/caveats are released)
- Transfer of ownership is officially registered and any applicable transfer/stamp duties are paid by the buyer
- The lender draws down the final settlement amount from the buyer’s loan account
- The property’s title is officially transferred to the buyer
This concludes the sale process and allows all parties to breathe a collective sigh of relief before stepping away as the proud owner of a new property or happy vendor paid in full!
The process of buying and selling can sometimes feel daunting, but you don’t have to go it alone. Speak to your local Hockingstuart office today for advice and assistance, including an obligation-free appraisal of your home’s current value.
Search our wide selection of high-quality properties for sale.