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The Settlement Day…
Yes, we have been waiting for this day for the past 6 weeks, The settlement day. The most important day in the property purchase process.
What do you mean by property settlement day?
It’s the day on which the financial transactions are executed as per the legal contract between the purchaser and the vendor. This normally takes place on the date agreed by both purchaser and the vendor while signing the contract of sale. By default, its on the 42nd day after signing a contract of sale by the parties. Sometimes, this are negotiated to 60 or 90 days as well.
What will happen on the property settlement day?
Before, it used to happen in a settlement house where purchasers solicitor as well as purchasers bank representative will meet vendors solicitor and their bank representative to exchange cheques. It used to happen at a particular time agreed between both the parties.
These days, its online settlements. Where all the respective parties sign their attendances virtually and do the settlements. The common tool used to do this as of today is PEXA. This takes roughly 10min to complete at time booked in.
What are the activities that must be completed by the purchaser before settlement happens?
The most vital step for the purchaser is to do a final inspection along with presence of vendor, their selling agents or representatives. This is to make sure the property is kept intact, all the inclusions (as mentioned in the contract of sale) are there, no leaks, no damages, no rubbish left out etc. This is mainly a comparison between what you inspected before signing the contract of sale with what’s the condition of the property now. If the agreement is to sell vacant procession, literally the property should be vacant, and vendor must be moved out with all his belongings before this inspection. This is very important, else purchaser may never know what can happen during vendors move.
Another point to remember, normally in the contract of sale, it will be mentioned as an “AS IS” sale. What does that mean? It means the property is selling AS IS, in the same condition as how it was when you inspected before signing the contract.
The purchaser, their solicitor and their bank or mortgage broker has work together to sort all the finances ready and are in place for settlement. The purchaser must make sure their part of money is kept in the accounts mentioned by the solicitor. If everything goes fine, at settlement the vendor has to be paid the whole amount of money as mentioned in the contract of sale (This includes, .025% (paid while signing contract) + amount paid on the last day of cooling period + rest of the amount paid by bank as mortgage).
What will happen if the purchase finds issues or so during pre-settlement inspection?
In case if the purchaser found issues, leaks, damages or rubbish in the property during the pre-settlement inspections, they must take photographs and share it with their solicitor in writing. The purchaser’s solicitor will then check those issues reported against the signed contract and if find valid, will contact vendors solicitor and will share the details. They will then negotiate and will agree upon 2 things
– Fix those issues reported before settlement and confirm in writing.
– Hold some amount from Vendor and provide vendor some time to fix the issues and confirm in writing.
In both cases, the amount or the time must be negotiated and agreed between both parties.
Remember, the chances or cancelling the settlement or delaying the settlement rarely occurs as that may invite legal issues. So, solicitors will try their best to do the settlement on conditions normally.
Note: Its always recommended to do the pre-settlement inspections, just couple of hours before the settlement schedules are booked in.
Pre-settlement inspections went fine, purchaser is happy, and no issues found. Then?
Please let the solicitor know about it, so that they can execute the settlement on time with no delays.
What will happen after a successful settlement?
Congratulations!! You own the property now, it’s been purchased. Purchasers solicitor will contact the purchaser and congratulate them. They will be requested to contact the real estate agent and collect the keys. The real estate by then will be updated by the vendors solicitor that the settlement happened successfully and please hand over the keys to purchaser.
Purchasers solicitor will send a settlement document along with all other documents used for settling this property to the purchaser in a weeks’ time. Purchaser should go through them to know till when the solicitor had paid the utility and council bills. Its purchasers responsibly to organize the payment after that.