Negotiating the right settlement period

Don’t make it too short

There’s a reason settlement periods aren’t usually any less than two weeks. Solicitor Robert Kern at Slater and Gordon’s conveyancing department says that for standard property transactions, any less than 14 days doesn’t allow enough time to conduct the required searches, such as those relating to rates, water, land tax, building records and so on.

“These need to be conducted and reviewed before settlement can proceed,” says Kern.

Factor in finance

For buyers purchasing with bank finance, a key consideration is allowing enough time for the bank to issue and approve the relevant documents.

“This can take some time,” explains Kern. “Once you advise the bank that a contract has been signed and you’re proceeding to a settlement date, they generally require 14 to 21 days to give you unconditional finance approval.

“Once you get this, you then need a minimum of 14 days to receive and sign all the loan documents. These are issued by the bank’s solicitors, then sent out to you for signing, then sent back to the bank for review. If you accidentally miss a signature or forget to tick a box, that can delay everything for a few days.”

Complex transactions take more time

“If you’re looking at someone going guarantor, or you’re purchasing through a family trust or anything of that nature, the process takes even longer because the banks have to do more to make sure everything is in order. Any level of complexity can add days or even weeks to a settlement time frame,” says Kern.

Longer settlements are also common when buying ‘off the plan’, as the scheme or plan has to be registered with the titles office before settlement can occur.

Choose a date that works for you

Settlement day, or the day just before it, is your last chance to inspect your property before taking ownership.

“Don’t agree to a settlement date when you’re going to be unavailable all day, or when you’re going to be away on holiday, for example. You need to be around on the day to check that everything at your new property is in order,” says Kern.

Negotiate if you can

Kern says buyers and sellers regularly negotiate property settlement dates that work for them both.

“Sometimes they do this via the selling agent, or if they have already appointed a legal representative, that representative might conduct the negotiations with the other party.”

“The system is different with auctions. As the successful bidder, you are agreeing to settle on the date indicated in the contract. When you review this document prior to bidding, if you know the date won’t work for you, have a chat to the selling agent and try to sound out whether or not the vendor would consider negotiating an alternative date.”

Whether it’s a sale by private treaty or a sale by auction, once a contract has been signed, the settlement date is fixed. Either party may approach the other about amending the date, but Kern says there is no obligation for the other party to agree to a change.

“That’s why it’s important you make sure the date works for you, right from the beginning.”

Settling on a settlement date involves careful consideration and negotiation, but it’s well worth the time and effort to achieve a date that works for both buyer and seller. Your settlement experience will be the smoother for it!