Whether you’re selling a home for the first time or adding another sale experience to your property journey, understanding exactly what happens on settlement day will help you avoid any confusion, ensuring that your settlement day runs as smoothly as possible.
To help you celebrate a successful property sale, we’ve put together a list of common questions about settlement day and what you can expect.
What is settlement?
Put simply, settlement is the final transaction of finances and legal paperwork that transfers your property into the hands of its new owners.
On settlement day, financial transactions related to the sale are finalised and the incoming buyers take legal and physical possession of your property.
When is it?
The date for settlement is agreed on in the contract between yourself and the buyer, and this varies from contract to contract. This amount of time leading up to settlement (commonly known as the “contract period”) allows for all the conveyancing and legal work to be finalised before the sale of your property goes through.
Depending on your contract negotiations, and which state or territory your property is situated in, your settlement period may be as short as 28 days, or as long as 120 days.
Settlement day is the exciting culmination of all that waiting, time and patience, so get that champagne on ice and get ready to celebrate your amazing achievement!
1. Transferring Money
For most Australians, property is bought with the assistance of a home loan. On settlement day, you must have sufficient funds to pay out any mortgage you have on the property you are selling. Your buyer will also need to ensure they have sufficient funds to pay the remaining balance of the purchase price for your property.
2. Transferring Titles
Settlement day is also when the title of the property is transferred to the buyer, making them the new legal owner of the property you’ve sold.
Managing these transactions is something your conveyancer oversees and helps organise. This is done with the assistance of the buyer’s conveyancer and your state or territory’s land titles office to ensure the right paperwork is in place for settlement day.
Your responsibilities as a seller
As the seller, it is your responsibility to make sure that council and water rates are fully paid, up to and including the day of settlement. Your incoming buyer takes responsibility for all future rates, beginning the day after settlement. These payments are often made as part of the settlement process and are known as “adjustments”. Your conveyancer will provide information to you on what adjustments are being made on your sale.
On settlement day, you need to hand over the property in the same condition as the date of the contract – and it’s important to ensure that the outdoor area has not been forgotten.
For your incoming buyer, they will undertake a pre-settlement inspection, usually in the days leading up to settlement day. This is a critical step towards finalising the sale, as it is their opportunity to make sure the property is in the same condition as when they agreed to buy it.
As the seller, you need to prepare for this inspection by making sure your property is clean and tidy, with all rubbish removed and all special contract conditions adhered to.
If you have damaged the property before settlement or the property is in a worse condition than it was at the date of the contract (for example, there’s now a broken window or overgrown lawns and gardens), it is your responsibility to make sure the repairs or maintenance is completed. Otherwise, you may be required to compensate the buyer for any cost involved to do so.
Budgeting the time and money to book cleaners (or clean it thoroughly yourself) will make your property sparkle for the new owners. It is your obligation to ensure the property is clean and free from rubbish and any personal items on settlement.
To add an extra touch of kindness and care, consider putting together a welcome pack – including manuals for built-in appliances, listing paint colours of walls and trims for any future touch-ups and even the contact details of your previous gardener or maintenance specialist. It’s a great way to introduce new owners to your home, so they can enjoy it as much as you did.
Top tips leading up to property settlement day
Don’t leave things to the last minute
Settlement day is serious business. With many buyers keen to move in on the same day or the very next day, making sure you’ve packed and removed all your belongings, and ensuring the property has been left clean and well-presented for the new owners, before the allocated settlement time, is critical.
Prepare for the process by tackling little jobs along the way, in the lead-up to your property settlement day. Don’t forget to make time for a going away celebration, if you can, especially if you’re leaving an area for good.
Take the time to say goodbye to your property
If you’ve lived in the home you’ve sold, settlement day is about much more than collecting the money for the sale. It is also about leaving a place where meaningful memories have been made. It’s natural to feel emotional about saying goodbye to a home that you’ve loved but, by focusing on the things you’re looking forward to at your new address, try to see settlement day as an exciting new beginning, rather than an end.
Celebrating settlement day
With a quality conveyancer looking after you, the settlement day process can easily be managed without you present. To make the occasion memorable, think about popping that champagne cork, or simply reflect on the part you played in achieving a successful property sale.
Have a question about the process? Or want to speak to a member of our team?
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This article is provided for general information purposes only. Its content is current at the date of publication. 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.