Buying + Selling Property: What Happens On Settlement Day?
Written by: Nancy Robertson | Legal Team
Settlement day has finally arrived – congratulations!
You’ve done all the paperwork, you’ve finished your house inspections and you’ve finally found the property that you are ready to call home. Or, on the other hand, you’ve finished your renovations, you’ve styled your home perfectly and you’re ready to hand over the keys to the new owners of a house that you once called home.
Buying or selling a house is no easy task, but with the right conveyancing team on board – it can be a breeze. From Section 32s, vendor statements, verification of identity and everything in between – we’re going to take you through what happens on settlement day!
What is Property Settlement?
Property settlement is the official process of transferring ownership of the property that you are either wanting to purchase or to sell.
The property settlement process is conducted by both the legal and financial representatives of both the buyer and the seller which is where the transfer of property ownership happens. These days, with new online software where all parties involved in the transfer i.e. the bank, conveyancers, real estate agents etc. the transfer itself only normally takes about an hour.
However, in saying that, there is a lot of work that needs to be done beforehand to make sure it’s smooth sailings when settlement day finally arrives.
What Happens on Settlement Day?
With so many parties involved in the process of transferring a property – settlement takes place at an agreed time and place between all parties.
If you are the buyer or the seller of the property, you’re able to sit back and watch from afar as you won’t have to physically do anything on settlement day. This is where your conveyancing team comes in to keep you in the loop and deliver the good news once everything is complete.
In a nutshell, the settlement day process involves your team (solicitor and/or conveyancer) exchanging the final documents of the sale. They will also organise for the balance of the purchase price to be paid to the seller and vice versa.
Let’s break it down further…
Step One: Lender Withdraws Funds
On settlement day, you will need to ensure the funds to purchase the new property are ready and available.
Provided all of the necessary documents have been signed, including your client authorisation, verification of identity, additional funds have been required (if necessary) and the bank has provided their funding, the PEXA workspace should balance and settlement will occur electronically.
This is where your conveyancer works with you and your lender to ensure the bank transfers the funds to the seller.
Step Two: Notify the Seller
Once the transfer of the balance of the purchase price of the property has been made, the seller will be notified and confirm receipt of the funds.
Step Three: Documents are Signed + Exchanged
Before becoming the new owner of the property, all of the official documents need to be signed by both parties. While most documents are prepared prior to settlement day, there are final signatures that are required and official documents that will be double-checked by your conveyancer to ensure everything has been executed correctly by all parties involved.
Picking Up The New House Keys
Once everything has been signed, sealed and delivered, the real estate agent will be supplied with the keys who then hands them to the new owners. This means that the vendors no longer have access to the property and the settlement process is complete.
State Revenue Office – Stamp Duty
All transfers of property, including transfers between related parties, must be assessed for the stamp duty by the State Revenue Office.
Stamp duty will be arranged by your conveyancer to be paid at the same time as settlement.
The vendor’s legal representative creates the duties online form (Transfer Form) and sends an invite to the purchaser’s legal representative who completes their part (Transferee Form). Once both parties have signed their respective forms, the conveyancer claims the stamp duty applicable, however, the transfer should be assessed and stamped by the State Revenue Office as non-dutiable.
Verification of Identity + Client Authorisation Form
All parties who participate in a property transaction involving a transfer of land, must complete a verification of identity check which involves providing to an authorised person copies of their passport/birth certificate, driver license and health care card (or other suitable identification) to verify their identity.
The client authorisation form authorises your legal representative to act for you at settlement.
How To Prepare For Settlement
Once you have purchased or sold your property, your conveyancer will assist you in the process from the signing of the contract through to settlement.
This assistance includes provision of advice to you in relation to the Contract of Sale and Vendor Statement.
Your legal representative will liaise with your broker/lender to ensure your finance is in place for your purchase which could include provision of copy Contract of Sale, Transfer of Land and other documents to assist with the loan application. Should you be selling your property, your legal representative will be liaising with your bank in relation to the processing of the discharge of mortgage on title and provision of payout figure.
You will be asked to complete a verification of identity and signing of a client authorisation form authorising your legal representative to act for you at settlement.
Your conveyancer is required to initiate the creation of a State Revenue Office duties online form (Transfer Form) and forward an invitation to the purchaser’s conveyancer for their client to complete the transferee form. Once both parties have signed the purchaser’s legal representative will claim the stamp duty applicable to the settlement.
Approximately seven to ten days out from settlement your conveyancer will prepare the Statement of Adjustments/Settlement Statement and submit the same to the Vendor’s conveyancer. Once they have reviewed and approved the figures, you will be given a copy and in the event, you are required to provide additional funds to complete your purchase you will be given an estimate of the funds to be paid into trust pending settlement.
Canny Legal + Helping You Navigate Property Law
Canny Legal can assist you with the conveyancing process for both selling a property and also the purchase of a property.
For a vendor, we can prepare the Contract and Section 32 and carry out the conveyancing process from the beginning to settlement. We ask all clients to answer a questionnaire before beginning the preparation process and assist in obtaining any information that may be required, but not easily obtainable.
For a purchaser, we would always recommend that you contact Canny Legal to review any Contract and Section 32 provided to you by a real estate agent before signing to determine not only that the Section 32 is not deficient in any way, but also to ensure that appropriate conditions are contained in the Contract of Sale. Both documents are equally important and must be read in conjunction with each other.
Get in touch with our team if you are preparing for the sale or purchase of a property so we can assist.
