The Property Settlement Day…
Yes, we have been waiting for this day for the past 6 weeks, The settlement day. The most important day in the property purchase process.
What do you mean by property settlement day?
It’s the day on which the financial transactions are executed as per the legal contract between the purchaser and the vendor. This normally takes place on the date agreed upon by both purchaser and the vendor while signing the contract of sale. By default, it’s on the 42nd day after signing a contract of sale by the parties. Sometimes, this is negotiated to 60 or 90 days as well.
What will happen on the property settlement day?
Before, it used to happen in a property settlement house where the purchaser’s solicitor, as well as a purchaser’s bank representative, will meet vendors’ solicitor and their bank representatives to exchange cheques. It used to happen at a particular time agreed upon between both parties.
These days, it’s online settlements. Where all the respective parties sign their attendances virtually and do the settlements. The common tool used to do this today is PEXA. This takes roughly 10min to complete at the time booked in.
What are the activities that must be completed by the purchaser before property settlement happens?
The most vital step for the purchaser is to do a final inspection along with the presence of the vendor, their selling agents, or representatives. This is to make sure the property is kept intact, all the inclusions (as mentioned in the contract of sale) are there, no leaks, no damages, no rubbish left out, etc. This is mainly a comparison between what you inspected before signing the contract of sale with what’s the condition of the property now. If the agreement is to sell a vacant procession, literally the property should be vacant, and the vendor must be moved out with all his belongings before this inspection. This is very important, else the purchaser may never know what can happen during the vendor’s move.
Another point to remember is, normally in the contract of sale, it will be mentioned as an “AS IS” sale. What does that mean? It means the property is selling AS IS, in the same condition as how it was when you inspected it before signing the contract.
The purchaser, their solicitor, and their bank or mortgage broker have worked together to sort all the finances ready and are in place for settlement. The purchaser must make sure their part of the money is kept in the accounts mentioned by the solicitor. If everything goes fine, at property settlement the vendor has to be paid the whole amount of money as mentioned in the contract of sale (This includes, .025% (paid while signing the contract) + amount paid on the last day of the cooling period + rest of the amount paid by the bank as a mortgage).
What will happen if the purchase finds issues or so during the pre-settlement inspection?
In case the purchaser found issues, leaks, damages, or rubbish in the property during the pre-settlement inspections, they must take photographs and share them with their solicitor in writing. The purchaser’s solicitor will then check those issues reported against the signed contract and if find valid, will contact the vendor’s solicitor and will share the details. They will then negotiate and will agree upon 2 things
– Fix those issues reported before property settlement and confirm in writing.
– Hold some amount from Vendor and provide the vendor some time to fix the issues and confirm in writing.
In both cases, the amount or the time must be negotiated and agreed upon between both parties.
Remember, the chances of canceling the settlement or delaying the settlement rarely occur as that may invite legal issues. So, solicitors will try their best to do the property settlement on the conditions normally.
Note: It’s always recommended to do the pre-settlement inspections, just a couple of hours before the settlement schedules are booked.
Pre-settlement inspections went fine, the purchaser is happy, and no issues were found. Then?
Please let the solicitor know about it so that they can execute the property settlement on time with no delays.
What will happen after a successful settlement?
Congratulations!! You own the property now, it’s been purchased. The purchaser’s solicitor will contact the purchaser and congratulate them. They will be requested to contact the real estate agent and collect the keys. The real estate by then will be updated by the vendor’s solicitor that the property settlement happened successfully and please hand over the keys to the purchaser.
The purchaser’s solicitor will send a settlement document along with all other documents used for settling this property to the purchaser in a week’s time. Purchasers should go through them to know when the solicitor had paid the utility and council bills. Its purchasers are responsible to organize the payment after that.
Disclaimer: Articles in this blog are just the author’s or authors’ personal opinions. The author or authors cannot be held responsible/liable for any content in this blog. It may or may not be correct. Please do your due diligence and seek professional advice according to your circumstances.
