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6 property settlement tips for home buyers

By Paige McCallum

When it gets down to the nitty gritty, few people savour the process of buying a new home.

Property settlement is the light at the end of the tunnel. It’s the day when you become the legal owner of the home you’ve long wanted to call your own. And the good news is the difficult work’s done for you.

Here are six tips to guide you through the property settlement process.

1. Learn what property settlement is

First things first: Property settlement is a legal process that transfers the ownership of a property from one owner to another. It’s when you pay the balance of the sale price, and it’s usually conducted by your legal and financial representatives and those of the sellers.

The seller sets the settlement date in the contract of sale, with most scheduled between 30 and 90 days after you agreed the sale.

Property settlement is the day you assume legal ownership of the property you agreed to buy. Picture: REA Group

2. Arrange your final inspection

The seller must hand over the property in the same condition as when it was sold. A good way to check the vendor is on course to meet this obligation is to inspect the property sometime during the settlement period.

Legislation pertaining to a buyer’s entitlement to a pre-settlement inspection, however, varies from state to state.

In Victoria, for example, buyers are entitled to inspect the property at any reasonable time during the week before settlement, but in South Australia, they’re only entitled to an inspection a week before settlement if they stipulated in the contract that the sale was subject to one.

Either way, you’ll need to contact the agent to arrange an inspection, during which you should check all the items listed in the contract are there and in the right condition.

3. Organise building and contents insurance

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.

4. Check measurements

Your legal practitioner or conveyancer will send you a plan of the land so that you can ensure the measurements and boundaries correspond with the Certificate of Title. You should let them know if they do, and alert them to any discrepancies if they don’t.

It’s important that you provide documents and other information promptly when requested, as delays can be costly.

5. Apportion outgoings

During the property settlement, your representatives and the seller’s representatives will need to work out the share of rates and other charges each of you must pay.

While the seller is responsible for rates up to and including the day of settlement, you are responsible from the day after settlement.

The exact amount you will be held responsible for will be laid out in what is known as a settlement adjustment statement.

This adjustment statement will also outline how much land transfer duty (also known as stamp duty) you will need to pay on the sale. Depending on the state in which the property is located, you will be given anywhere between 28 days and three months after settlement to pay this duty – although it’s important to note that you cannot receive the title to your home until you have paid it.

6. Understand what happens on settlement day

Your lender and settlement agent (either your solicitor or conveyancer) are the ones in the driving seat on settlement day – so much so that you don’t even need to be there.

They will meet the seller’s representatives to sign and exchange the final documents of sale, with each of them responsible for a certain set tasks.

Your lender will register a mortgage against the title of your new property and provide the funds to purchase the new property, and your solicitor or conveyancer will need to check that any rights of third parties have been removed or released, that the existing mortgage on the vendor’s title has been discharged, that all clauses on the sales contract have been fulfilled, and that the property and mortgage transfer is registered with the relevant titles office.

Once that’s all done, your lender will debit from your loan account the amount they paid at settlement, and then you’ll need to pay the land transfer duty.

After that, you’re free to pick up the keys and move on in.


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