Selling a house successfully is a wonderful time – yet before you pop that champagne cork it’s wise to familiarise yourself with what you may need to consider during the settlement period.
The lead up to settlement comes with a lot of expectations – on both sides of the selling/buying fence. For the person buying your property, their excited to get into their new home. Your focus as the seller is different – you want to know that final payment on your property has gone through to prove the property sale deal is done.
Understanding the process helps reduce any stress or headaches.
Settlement? What is it exactly?
The final step in your property sale, this process takes place after you, as the seller, exchange contracts of sale with the buyer of your property. Upon settlement day, any financial arrears and obligations connected to the property must be settled.
Meanwhile, the buyer (or their lender/bank) pays the remaining amount agreed upon and the title is transferred to the buyer. They are now the new owners and have both physical and legal ownership of your property.
What may delay property settlement?
Settlement periods vary and can take anywhere between 28 days and 90 days. The exact date of your own settlement period is something that is agreed to by both parties and is clearly outlined in the contract of sale, the Settlement Date.
Delays can occur and complications around finance is a common cause. It’s a reason why working with an experienced conveyancer can save you time and money. That’s why having a Lawyer undertake the conveyance of your property is a necessity, and of course they are fully aware of Australian Property Law.
Delaying settlement can incur penalties and depending on which party causes the delay in settlement, and the state or territory the sale took place in, the penalty for delays to the settlement day include interest and/or additional costs. Valuations can also be problematic, and if finance falls through for the incoming buyer, your conveyancer / lawyer can help you understand your options.
As a seller, you have rights, but you also have responsibilities, so talking to your conveyancer to be clear about your obligations is always important.
Simultaneous Settlement
If you are selling one property at the same time you are buying another, some careful planning and attention to detail is needed to make sure that coordinating both settlements at the same time runs as smoothly as possible. That’s where it is important to talk to your conveyancer / Lawyer to discuss the possibility of adjusting the settlement period to give you the time you need. You may need to explore whether you can negotiate your contract to make your purchase ‘subject to completion of sale’, or speak to your financial advisor to see if applying for a bridging loan may help you achieve settlement more easily. It is not uncommon to have a simultaneous settlement yet I does require some planning.
Steps towards settlement
To settle successfully, it’s critical that the property matches up with its title and details. When a lender organises a valuation, your incoming buyer will be checking for a variety of details, including property measurements matching what is in the records.
The transfer of the property title is a key part of the settlement process. Your conveyancer / Lawyer will be responsible for handling this process but, because it is your signature on the contract, it’s important that you understand the process clearly.
On settlement day, provided all contract of sale conditions are met on both sides, the incoming buyer of your property will officially take ownership of the title.
Digital conveyancing convenience
Today all conveyances of property must be done electronically, this reduces any potential issues with bank and human error and provides you a clear track record of every aspect of your settlement process.
You can have a look at the property exchange platform here: PEXA what is it?
Congratulations on your sale
No matter how long your own settlement period is, selling a home isn’t always easy – especially in a fluctuating market – so taking time to reflect on your achievement.
Have a question about the process? Or want to speak to a member of our team?
We’re here to help. You can get in touch on 07 3278 1888
This article is provided for general information purposes only. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice based on your specific circumstances before taking any action concerning the matters discussed in this article.
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