What happens on settlement day for the buyer?

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Posted May 27, 2024

Buying a house involves a number of key dates, including settlement day when you take legal ownership of the property. Here's what you need to know.

Your successful bid at auction, or successful offer on a property, is cause for celebration, and it's typically a day marked with a glass of bubbles. But there's another major step to take before you can call the property home. The exchanging of contracts for the sale of the property is legally binding, but the sale and transfer of property is only completed on what's known as settlement day. So, what actually happens on that day?

What to know about settlement day

two people in kitchen discussing with smart tablet

You may want to get a building inspector to conduct a final inspection to make sure all Australian Building Codes have been met. 

What to expect on settlement day

What is settlement?

Settlement is when the ownership of a property is transferred from the vendor to the buyer. It is the day you pay the balance of the purchase price to the seller, get the property title and become the registered owner. “It is the finalisation of the sale between the parties. Once settlement and registration of the documents are complete, you will officially be the legal owner of your new home,” says lawyer Lindel Enticott, Solicitor and Head of Legal from Conveyancing.com.au.

How long is it?

Generally speaking, the settlement period is usually 30 to 90 days, and is a date agreed by both parties and stipulated in the contract of sale. It allows both parties sufficient time to meet their financial and contractual obligations, plus organise the logistics of moving. If you're buying off-the-plan, it could be a few years until you settle.

Who’s involved?

Settlement is a legal process involving financial representatives (bank or lender) and legal representatives (conveyancer or solicitor) for both buyer and seller. “At settlement the legal representatives will sign and certify the legal paperwork to transfer ownership and ensure the agreed financial payments have been made,” says Enticott. Your legal representative is essential during this final phase, particularly since the introduction of compulsory electronic settlements.

Consumer Affairs Victoria says, that “you are entitled to inspect the property at any reasonable time during the week before settlement". So, you’ll also need to be in touch with the estate agent to arrange the final inspection, which is to check that the property is still in the same condition it was on the day of the sale. The estate agent is also the one who hands over the keys.

If you’re buying a brand-new home, you may want to get a building inspector to conduct a final inspection to make sure all Australian Building Codes have been met. Consumer Affairs Victoria advises to "use an inspection service with full professional indemnity insurance. This will protect you if the inspection misses a problem that must be fixed".

Finally, if settlement day is also moving day, you’ll be dealing with removalists as well.

What’s happens financially?

“Settlement is when the buyer pays the balance of the purchase price to the vendor,” says Enticott. “The buyer's conveyancer will confirm the loan funds are ready to be released and that full payment will be made to the vendor. The vendor's conveyancer will ensure full payment is paid to the vendor at their direction, less any payments required to third parties such as their loan repayment, agent commission or rating authorities."

Other bills you need to pay on the day include land transfer duty, commonly known as stamp duty, and if you have it, lender's mortgage insurance. Stamp duty, which can be tens of thousands on top of everything else, is paid at settlement, usually electronically. 

To calculate the stamp duty, check here.

three people sitting at a table talking with paperwork and a laptop in front of them

With compulsory electronic settlements, it's no longer necessary to meet with a lender or real estate agent on settlement day. Image: Getty.

What happens legally?

The property is being rightfully and legally transferred into your name. "Your conveyancer prepares all the legal documents required for this exciting real estate transaction. Your conveyancer or lawyer will check and sign the transfer documents on your behalf for registration with the land titles office. The registration (to record the change of ownership to your name) occurs contemporaneously with the payment of the purchase price to the vendor,” Enticott says. 

Who tells council?

“As part of the conveyancing process, once settlement is complete, we will notify the water authority, local council, State Revenue Office and Owners Corporation Manager (if applicable), to advise them that you are the new owner of this property from the settlement date,” says Enticott.

Council rates are the responsibility of the seller up to and including the day of settlement. Your conveyancer will prepare a ‘State of Adjustments’ that apportions the outgoings, including water rates, council rates, and if applicable, land tax or owners corporation fees. Enticott also advises that “any outstanding fees payable to the authorities will be collected from the seller at settlement to ensure that the rates are paid in full and you do not inherit any debts".

Can I change the settlement date?

The settlement date stipulated in the sale of contract can only be varied by agreement of both parties. This is intended to protect both parties to the contract. The buyer may ask for an extension, however, “if the seller does not agree, you will be bound to complete settlement on the contractual date. The seller also has the right to charge penalty interest on the balance of the purchase price owing for each day you delay,” says Enticott.

Anything else to consider?

Getting utilities connected is your job. Enticott advises contacting your preferred suppliers for gas, electricity, phone and internet about a week or so before settlement, so everything can be connected on the day, making for a seamless move into your new property.


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