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Buying a house? Here's what happens on settlement day

in Conveyancing & Property Law by Paul Brown on

The wait for your new home is almost over – today is your settlement day. You’ve probably guessed that this is the day when the transaction is completed and you can collect the keys, but what else should you be prepared for?

Here’s five things you should expect to happen on settlement day:

1. A meeting between representatives of the buyer and the seller

Settlements involve the exchange of documents and cheques to complete the transaction. The four parties usually involved are your (the buyer’s) representative, the seller’s representative, your bank (to advance purchase funds) and the seller’s bank (to collect payment of the outstanding amount of the seller’s mortgage).

2. Payment and documents

During the attendance at the settlement venue several sets of documents are commonly examined and swapped between the parties:

  1. Cheques in payment of the balance purchase price – these will come from you and your bank. The seller and the seller’s bank will check that these are correct;
  2. Transfer of Land Documents – these documents are completed and reviewed by the parties ahead of the settlement, and are again reviewed by your representative and your bank at settlement to ensure that they are completed and ready to lodge with the land titles office.
  3. Release/Discharge of Mortgage – this is provided by the seller’s bank once they are satisfied that they are receiving the correct payment for the outstanding amount of their mortgage and allows the land titles office to remove the record of the mortgage from the title of the property.

3. Final inspection of the property

It’s a good idea to do a final inspection of the property on or as close to the settlement day as you can. Doing this allows you to check that the property is in the same condition as when you signed the contract (with fair wear and tear) all included items remain and that it is otherwise left in a reasonable state.

4. Final checks and changes to adjustments to the purchase price

Although these adjustments will be drafted ahead of settlement, a final check will be done on the day to make sure things are right. These adjustments account for charges related to the property such as rates to ensure that each party pays their share or these periodic outgoings relative to the time they owned the property. Usually only charges related to the land are adjusted in this way. Other charges that are related to the occupier or owner, such as telecommunications charges are not usually adjusted.

5. Moving out and moving in

Unless otherwise agreed, before the buyer can move in, the rest of the settlement process must have been finalised. Similarly, the seller must have vacated the property before the settlement occurs. Remember that settlement may not occur until later in the afternoon, so you’ll need to plan your move to avoid removalist holding costs.

If possible, it’s often better to plan to move after the settlement day to ensure free access to the property and for sellers to have vacated the property ahead of the settlement date.

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