Things To Expect During Your Settlement Period
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It’s not every day that you buy or sell property, and the process – from finding the right agent to arranging the finance and ensuring all your ducks are in a row in time for settlement – can be a bit confusing and stressful at times. Although you will always have professionals guiding you, it can provide peace of mind to have your own clear understanding of the process you are embarking on. So, what exactly is a settlement and what should you expect during your settlement period?
What is settlement?
Settlement is the legal and financial process which takes place to effect a change of ownership of a property. During this process, all outstanding financial arrears and obligations associated with the property will be settled so that going forward the new owner only pays for things like council and water rates incurred from the day they took ownership.
In addition, the title will be transferred to the new buyer, and they will take physical ownership of the property.
Is there anything that can delay settlement?
Yes. While the majority of settlements will come off without a hitch, occasionally settlement will be delayed by days or even weeks. This doesn’t mean that there is a problem or that it won’t be complete, there could be a small problem such as:
- a form being completed incorrectly;
- the wrong type of identification being provided for verification;
- the buyer raising an issue during the final inspection; or
- the bank being delayed due to a backlog of new loan applications or another clerical issue.
Unless your conveyancer tells you otherwise, a slightly delayed settlement isn’t anything to worry about too much.
To ensure you aren’t the one to cause the delay you should answer all telephone calls and emails from your conveyancer promptly and provide everything they ask for within the deadlines they set. If you are the buyer, try to ensure that funds are available the day prior to settlement so that there are no delays due to finance.
Sometimes there are penalties for delayed settlement. This will depend on which party caused the delay. The penalties can include interest which is calculated daily and/or additional costs.
What happens at settlement if I’m buying and selling at the same time?
For vendors who are also buying a property and want to move out of their old home and into their new one on the same day, a simultaneous settlement can take place. This is quite common and means that the proceeds of your sale can be used towards your purchase without you having to personally transfer the funds.
If, at the time you sell or buy, the settlement dates do not align, you should inform your conveyancer so they can negotiate with the other side(s) to ensure the settlements line up. It is usually as simple as having one friendly conversation to seek a slight date change. Most people are understanding and will allow for the change. If it is impossible because one of the other parties has already confirmed other arrangements, you shouldn’t take it personally.
In the event your purchase must go through days or weeks before your sale, you should speak to your bank or broker about arranging a bridging loan to cover you until the proceeds of the sale are available.
The e-settlement process
In February 2023, e-conveyancing became mandatory in Queensland. This process does away with the need for paperwork and the old system of cheques changing hands, and no longer requires settlement agents to attend settlement offices in person. A software program called PEXA is now used to conduct e-conveyancing and your conveyancer, the other side’s conveyancer, and each party’s bank will all have access to the same workspace so settlement can be completed efficiently, transparently and safely.
If you are considering buying or selling a home and need a professional to carry out the conveyance for you, our experienced conveyancing team can assist with everything from the contract review or preparation right through to settlement.