If you are about to embark on your first property ownership experience, it’s natural to feel a little daunted by the process. This is where it pays to know what happens beforehand.
Once you have agreed on the price, paid the deposit and contracts have been exchanged, the next milestone in your property buying journey is settlement. Here’s what you need to know.
1. Understand settlement
The logical first step is to understand what settlement is. Property settlement is an official process usually conducted between your legal and financial representatives and those of the seller. It’s when you pay the balance of the sale price and ownership transfers from the seller to you. It is also the day you are handed the keys to the property and you can move in. The seller sets the settlement date in the contract of sale with the property settlement period normally between 30 and 90 days. This gives you time to perform the following steps and plan for the big move.
2. Arrange your final inspection
You’re entitled to inspect the property one final time before settlement. Contact the agent to arrange this inspection. Normally this occurs just before settlement date. The purpose of this inspection is to ensure that the property, including all agreed fittings and fixtures (as per the contract) is being handed over to you in the same condition as when you purchased it. Check all the items listed in the contract are present in the home and to standard.This is also an opportune time to take some measurements inside the home to determine how and where your furniture will fit. For example, if you find that your existing lounge suite is too large, you will know that there is no point moving it in and that you need to purchase a new one and get rid of the old one.
3. Organise insurance and the move
Your lender will usually recommend you take out building and contents insurance effective from the date the seller signs the contract. This is to safeguard their interest in the property, as well as your own. Building insurance is mandatory, however contents insurance is not. But it is highly recommended. This is also the time to organise the removalist, if you are using one, and start packing.
4. Check measurements & boundaries
Your legal practitioner or conveyancer will send you a plan of the land so you can check all measurements and boundaries correspond with the Certificate of Title. You should confirm this or alert them to any discrepancies. Make sure you provide documents and other information promptly when requested, as delays can be costly.
5. Understand your outgoings
At settlement, all outgoings, such as rates and other charges, are adjusted between you and the seller. The seller is responsible for rates up to and including the day of settlement. You are responsible from the day after settlement. You are also responsible for paying land transfer duty on the sale (also known as stamp duty). It is usually paid at settlement, but you have up to 30 days after settlement to pay. You cannot receive the title to a property until you have paid the duty. Click here for access to the Transfer Duty calculator. Some concessions may apply for first homebuyers.
6. Collect the keys
Once settlement is completed, you can collect the keys from the agent, take possession of the property and move in.