What is property settlement?
Property settlement is the process through which you officially become the owner of the property you’ve bought. The settlement day is specified in the contract of sale, with a few weeks in between known as the settlement period.
What happens in the settlement period?
There are a few things you might need to do in between the contract going unconditional and settlement day:
- Conveyancing: The legal process of transferring ownership takes place during the settlement period. This is generally done by a professional conveyancer or solicitor, although you can also buy DIY conveyancing kits.
- Finance: The settlement period is also usually when you finalise your home loan, which is officially paid out on settlement day.
- Pay stamp duty: In most states or territories you pay stamp duty either before or on settlement day.
- Final inspection: This normally takes place a few days before settlement, so you can check the property is still in the same condition as when you signed the contract
What happens on settlement day?
On settlement day:
- Your lender releases the money and the seller gets paid
- Any deposit you’ve provided is transferred to the seller
- You officially become the legal owner
- You can generally pick up the keys from the seller’s agent
What is a simultaneous settlement?
If you’re upgrading, downsizing, or simply moving homes, simultaneous settlement means to sell your old property and buy your new one on the same day. Usually the sale settles first, then the proceeds go towards finalising the property you’re buying. You need to line up the settlement day on both the sale and purchase contract to have a simultaneous settlement.
Can I choose the settlement period?
The settlement period will be laid out in the contract of sale. It’s usually open to negotiation, so both buyer and seller need to agree. This can be especially important when for example, the buyer needs to sell their property first, as that transaction may have to go through beforehand.
You’ll need to make sure your settlement period gives you enough time to get everything done that you need to.
Can you delay or shorten the settlement period?
If you need to delay the settlement period as the buyer—for example, if it’s taking longer than anticipated to finalise your home loan—the seller may be entitled to compensation. You may also be sent a ‘Notice to Complete’, which is a formal legal demand to settle by a new strict deadline (usually 14 days). If you don’t, the seller may be entitled to keep your deposit and walk away.
On the other hand, if it’s the seller causing delays, you could send a Notice to Complete of your own. If the seller doesn’t make the new deadline, you could be entitled to walk away and take back your deposit.
What’s a normal property settlement time?
The property settlement period is usually negotiated between the buyer and seller. Six weeks is common, but it could be longer or shorter depending on preference.
Typical settlement periods by state and territory
Each state and territory offers the following guidance for how long a general settlement period is:
Settlement usually takes roughly… | |
|---|---|
New South Wales | Six weeks |
Victoria | 30 to 90 days |
Queensland | Four to six weeks |
Western Australia | 30 to 90 days |
South Australia | Four to 12 weeks |
Tasmania | 30 to 90 days |
Northern Territory | 30 to 90 days |
ACT | 30 days |
Source: State and territory government websites.
How to make property settlement go smoothly
There are a few things you can do to make sure things go smoothly during the settlement period:
- Get home loan preapproval: You usually finalise your home loan during the settlement period, after the contract goes unconditional. That means being rejected for the loan you need can create big problems, so it’s best to get preapproved beforehand to be more certain you’re eligible for the mortgage you’re after.
- Get your conveyancing done: The transfer of ownership can’t happen without conveyancing. You can do this yourself, but it’s generally recommended to hire a professional—it’s pretty important, after all.
- Get insurance: Depending on where you’re buying, you may be responsible for any damage to the property from the day after you sign the contract, which can make it important to get home insurance right away.
