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With paper settlement making way for electronic conveyancing in most states of Australia, settlement day has changed for the better.
South Australia is the latest state to join NSW, Victoria and Western Australia in mandating electronic conveyancing. What this means for you as a buyer or seller, is that settlement day should be a much smoother affair. There’s no longer a need for the representatives of the buyer and sellers to meet up with the lender in person to hand over documents and cheques. Instead, the process occurs digitally online, including the same-day release of funds.
If property settlement takes place in a state where paper settlement is still the norm, the process is slower and can be vulnerable to delays from paperwork errors or bank cheque clearance times.
Either way, property settlement is an exciting milestone. If you’re the buyer, it’s the day you get the keys to your new home. If you’re the seller, you receive the remaining balance of the house price.
What happens on settlement day for buyers?
You might need to compensate the seller for any property-related costs they have paid in advance.
As a buyer, you need to ensure you have enough funds available on the day to pay all the settlement costs down to the very last cent. Before settlement, your legal representative will provide you with a breakdown of these costs – usually known as a settlement adjustment statement. Bank fees, stamp duty concessions or government rebates like the First Home Owner Grant can all affect the size of the final bill.
You might also need to compensate the seller for any property-related costs they have paid in advance: council rates, body corporate, water, utilities. Check the calculation of these costs to be sure you’re only paying for the portion of the period in which you own the property.
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If your lender is covering any of these costs for you, be sure to liaise with them well in advance of settlement to ensure these funds are made available on the day. Similarly, if you discover any problems at the pre-settlement inspection of your new property, be sure to inform your legal representative before settlement day.
The other vital property settlement task is getting the paperwork in order. Without it, you won’t be allowed to take possession of your new home. For your legal representative to proceed with electronic conveyancing, you will be asked to complete a Client Authorisation form. This gives authority for documents to be signed and lodged on your behalf, including transfer documents ensuring all third party rights are removed, and there is clear title.
On the day of settlement, the transfer of land and mortgage is lodged digitally with the relevant government agency in your state. Your registration as the new owner is complete.
What happens on settlement day for sellers?
Signing a Client Authorisation form enables your conveyancer to work on your behalf to hand over the title to the purchaser’s legal representative. This work includes going over the contract with a fine-tooth comb and checking that there are no existing mortgages on the property. You will have previously signed the transfer documents, so they’re ready for your conveyancer to hand over on settlement day.
Assuming the seller has the money ready, you will receive the remaining balance of the sale price plus any deductions or reimbursements.
How long does the settlement process take?
Now with all parties collaborating online, the settlement transaction can be completed very quickly. The settlement money will usually clear into the seller’s account on the same day using electronic funds transfer. You can keep track of the process and receive alerts at crucial stages through a free electronic conveyancing app – ask your legal representative for details.
How do you get the keys on settlement day?
The real estate agent won’t release the keys until they have confirmation that settlement has gone through. As soon as this happens, you can arrange to come and pick them up.
Any more questions about settlement day or financing a new property purchase? Contact your local Yellow Brick Road mortgage representative, and we’ll be happy to answer.
Useful reading: Don’t Make These 6 Mistakes at Property Settlement