What you need to know about settlement day

Homeowners know only too well how many weekends can be spent looking for the perfect property, and the relief that comes when finally, a purchase is made.

However, between putting up your hand and popping open a bottle of bubbly on your first night in your new home, there’s one last leg: settlement.

“Settlement day is the final step in your real estate transaction. It’s the day the ownership of the house transfers from the seller to the buyer,” says Fahey Younger, a CEA licensed estate agent at Harcourts.

What this means is it’s the day the balance is paid to the seller and the buyer gets the property title and becomes the registered owner. And, excitingly, adds Younger, “It’s the day you get the keys!”

A settlement period is commonly between 30 to 90 days.

“Settlement day is usually set by the seller, but money talks; if the purchaser wants a quicker or longer settlement, it can be negotiated and vice-versa,” explains Younger.

While the settlement date is specified in the contract of sale, it’s not uncommon for that date to be pushed out.

“Delays usually involve one party’s bank not being prepared or missing a document or a deadline. Don’t panic if this happens – but be prepared,” cautions Younger.

She shares an example of a recent transaction with a delayed settlement.

“For one family, had they not already entered in to a lease agreement that allowed them early access to the property, they would have been sitting out the front with a truckload of furniture, four kids and a dog with no home to go to. Allow yourself a little wriggle room, if you can,” she advises.

Settlement is an official process, which is why it needs to be handled by a conveyancer (a licensed professional dealing exclusively in real estate law) or a solicitor.

“The list of documents required to sell and buy a house are extensive, this is why an experienced conveyancer is vital,” says Younger. 

“Your agent will know one and be able to recommend one to you.”

It’s important to make sure all building and contents insurance are effective from the purchase date and at settlement, rates and other outgoings will be adjusted between the buyer and seller.

For settlement day to run smoothly, home loan specialist Caren Holt, says conveyancers on both sides will have organised the contract of sale to have been signed and dated by both buyer and vendor.

Holt adds it’s also crucial to ensure all funds contributing towards settlement are available prior to the big day, including land transfer duty fees (formerly known as stamp duty), or any other fees that might be incurred to them on the date.   

Holt’s role is to help the buyer understand the funds needed, walk them through the mortgage documents and ensure the buyer meets all the requirements from the lender so settlement can happen on the contract date. She also assists with the settlement booking.

Examples of documents that may be required include identification as per lender requirements, a fully executed contract of sale and certificate of currency.

The primary responsibility of the buyer, Holt says, is signing the loan documents and returning them on time, along with any additional requirements. This ensures the lender will be organised at their end as well.