Sure, it can be so much fun searching and going to inspections, but it is doubtful whether you can find a buyer who can say that they like the protracted negotiations and chaotic back-and-forth’s – and mean it!
Property settlement is the long-awaited culmination of a property transaction, when the home you have long wanted to own becomes legally yours. And the good news is that the hard work is done for you.
Below are six tips to help you along the property settlement process:
1. Know about property settlement
What is a property settlement? It is a legal process that shifts the owners of a property from one owner to another. It is the day you pay the rest of the sale price and is typically handled by your legal and financial representatives. The vendor decides the settlement date in the contract of sale, which is typically arranged between 28 and 42 days after the parties exchange contracts but this can be negotiated to a mutually agreed date.
2. Organise your final inspection
The property must be in the same condition as when it was sold and handed over to you. Inspect the home at some point during the settlement period to check if the seller is on target to fulfil this obligation. I recommend the late afternoon of the date prior to settlement but be aware that pre-settlement inspection differs from state to state. You should verify if all the items included in the contract are present and in the right condition.
3. Arrange for building and contents insurance
Your bank will normally advise that you get building and contents insurance starting from the date the contract is signed by the seller. This is to protect the seller’s interest, as well as yours, in the property. A great contact is Trevor Gibson at Newsure Insurance. Contact me to as for his direct mobile number.
4. Verify measurements
You will receive a plan of the land from your solicitor or conveyancer. You can use it to verify if the measurements and boundaries are what are stated in the Certificate of Title. Advise them if they check out and notify them of discrepancies, if there is any. Make sure you furnish the documents and other information right away when requested, as delays can be expensive.
5. Allocate expenses
During the property settlement, both yours and the seller’s representatives must agree on the portion of rates and other fees that each of you must pay. The vendors must pay the fees up to and including the settlement day, and you have to pay from the day following the settlement. The correct amount you must pay will be specified in what is called as a settlement adjustment statement. It will also include the amount of land transfer duty (or stamp duty) you must pay on the sale. Depending on the state where the property sits, you will have between 28 days and three months after settlement to pay the stamp duty. However, you have to remember that you can’t get the title to your property until this duty is paid.
6. Know what transpires on settlement day
The people leading on settlement day are your lender and settlement agent (either your solicitor or conveyancer), so you are not required to be present. Not so long ago all parties would meet to sign and exchange the final papers of the sale, with each of them in charge of a certain set of tasks. These days most settlements are done electronically.
The job of your lender is to register a mortgage against the title of your new home and provide the funds to buy the new home, while it is the task of your solicitor or conveyancer to ensure that any rights of third parties have been taken off or discharged, that the present mortgage on the seller’s title has been released, that all clauses on the sales contract have been satisfied, and that the transfer of home and mortgage is registered with the appropriate titles agency.
When everything is done, the amount paid at settlement will be debited from your loan account by your lender. Then, you must pay the land transfer duty. After this is done, you can now get the keys and move into your dream home.