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What is involved in the settlement process?

Settlement is an exciting day in every buyer’s journey.

But what exactly is the settlement process, and what can you expect on settlement day?

What is the settlement process?

Property settlement is the legal process that transfers the ownership of a property from the vendor to the purchaser. 

Legal and financial representatives, typically a conveyancer and lender, facilitate the process on behalf of the buyer and seller.

The settlement period is outlined in the contract of sale and is typically between 30-90 days, from the time both parties have signed the contract. However, it can be a longer or shorter time period, as agreed upon by both parties. 

The settlement process concludes on ‘settlement day’.

Known as settlement, this is the final stage of a sale, when the last documents are lodged, the balance of the sale price is paid to the vendor and the buyer takes possession of the property.  

On settlement day the buyers take possession of the property. 

What happens at a final inspection?

Just before settlement, you’ll have the opportunity to do a final inspection of the property. 

This is a chance for buyers to make sure the property is in the same condition they agreed to purchase it in.

As outlined by Consumer Affairs Victoria, buyers are entitled to inspect the property at any reasonable time during the week before settlement, which can be arranged via the agent. 

You’ll usually do your final inspection on the day before settlement or even the morning of settlement day. 

During this inspection, buyers should take their time to check: 

  • That all appliances, such as heating, cooling and the hot water system are still in working order.
  • There’s no deterioration or damage to the property since signing the contract. 
  • All locks, keys and automatic garage door controls are supplied and working.
  • All items included in the contract have been left and are in the same condition. This may include agreed upon fixtures, fittings or furniture – such as light fittings or blinds. 
  • No rubbish or unwanted items have been left on the property that could prevent you from taking vacant possession.

If you find that something is damaged or not working as it was on the day the property was sold, you can request a repair. Contact your legal representative immediately, so it can be resolved before your settlement.

At the final inspection buyers are given the opportunity to ensure the property is in the same condition they agreed to purchase it in.

What happens on settlement day?

On settlement day, your legal and financial representatives will typically take the driver’s seat, and you often won’t need to attend. 

The buyer’s representatives will meet the seller’s representatives to organise the final documents and payments of the sale.

This is done either in person or online using a property settlement software called PEXA. 

How to prepare for settlement? 

While most of the legalities are organised by your conveyancer or solicitor, here are some things to check off your list to prepare for settlement:

  •     Contact a solicitor or conveyancer to act as your agent in the settlement process.
  •     Sign the contract of sale.
  •     Ensure you have enough money to cover all costs. This may include funds for stamp duty, the balance of the sale price, lenders mortgage insurance and any other fees and charges.
  •     Organise building and contents insurance effective from the purchase date.
  •     Attend the final inspection.

What happens after settlement?

After settlement, you are free to pick up your keys from the agent and move into your new home!

Meanwhile your lender will draw down on your loan. This means they’ll take the amount they’ve paid at settlement out of your home loan account. 

Typically, your conveyancer will also follow up with a letter outlining all the costs you’ve paid on settlement day. This can include the balance of the sale price, your stamp duty and council rates. 

Settlement concludes as soon as the vendors’ solicitor or conveyancer puts in writing to the real estate agent that the property has settled.