What happens on settlement day, and who does what

What is settlement?

Once you exchange contracts the sale process is legally complete, but you don’t take possession of your property just yet. 

You still need to go through a settlement period of around 30 to 90 days. This is when all the paperwork is processed to legally transfer ownership of a property to you. Settlement starts just after you have signed and exchanged contracts with the seller, and paid a deposit. It culminates on settlement day - the date when the property legally changes hands. The seller generally sets this date, though you may be able to negotiate a date that suits your circumstances.

During the settlement period, your conveyancer or solicitor will:

• Prepare the necessary legal documents for the property to be transferred into your name.
• Calculate what funds you need to cover items such as stamp or transfer duty, council rates, water rates and strata levies.
• Ensure that any entitlements you are eligible for, such as the First Home Owner Grant or any stamp duty incentive have been processed.
  

Let’s take a more detailed look at what you need to know about settlement day. 

What happens on settlement day?

Settlement day is the day your conveyancer or solicitor meets the seller's legal team to exchange all the relevant sale documents. 

They will liaise with your lender to make sure the funds are transferred to the seller, and register the transfer of land and the new mortgage with the title office. They also check that all existing mortgages on the property are paid off, and that all clauses in the contract of sale have been met.

Settlement day is also when your lender arranges to pay the balance of the purchase price of the property to the seller, minus the deposit. They also register a mortgage in your name against the title of the property. Once all this takes place you will be legally registered on the title of the new property.

You could be wondering what you need to do to prepare for settlement day.

What do you need to do for settlement day?

Your legal team will handle all of the necessary paperwork and details around the final payment to the seller, but there are still things you need to take care of. 

This includes practicalities like:

• Arranging for home and contents insurance for your new property.
• Redirecting your mail, switching over utilities and changing the billing address with all your providers.
• Sourcing a removalist to get all your possessions into your new home. 
  

It’s also worth remembering that just before settlement day you have a final chance to inspect the property. 

What happens at a final inspection?

The seller is obliged to keep the property in the same condition as when it was sold. To make sure this happens you are advised to carry out a final inspection or pre-settlement inspection. Because settlement is anywhere from 30 to 90 days, you want to be sure it looks the same as when you last inspected it. This is especially true for a property that is occupied until just before settlement occurs. 

A final inspection is not compulsory, but does give you peace of mind that the property is in the same condition as when you first viewed it. A final inspection usually takes place in the week before settlement day and gets arranged by the seller's agent.

Things to check at a final inspection include:

• That everything still works, including doors/windows, electrical outlets, lighting, plumbing, water heaters, air conditioners and heaters.
  
  
• All the items the seller agreed to leave (inclusions) and agreed to remove (exclusions) have been actioned, as detailed in the contract of sale. 
  

• Identifying any new damage that has occurred to any part of the property, indoors or out.
  
  
• The property should be clean and tidy indoors and out, free of rubbish or the previous occupant's personal belongings. 
  

Have any questions about settlement day or the property buying process?  Please get in touch and our team will do our best to help answer your questions.