Here's what happens in your property settlement period
Ever wondered why property settlement takes so long? Once a vendor accepts an offer, counting down the 30, 60 or 90 days until the transaction is complete can as painful as watching paint dry. But with a better understanding of why property settlement can take as long as it does, you might find that wait a little less strenuous.
Amidst one of the busiest times of the year for buying and selling in Melbourne, let’s break down what happens after you sign a contract.
Checking what you pay for
One of the first steps in the settlement process is ensuring the property matches up with its title and details. A lender can organise a valuation, licensed conveyancers or solicitors will send you title details so you can check property measurements with what is in the records, and buyers will usually organise an official property inspection a week or two before the final settlement date.
Contracts of sale normally stipulate that properties must be transferred in the same condition as when they were sold – inspections late in the property settlement period make sure of this.
If a property does not match its title details, a transaction could be in jeopardy. Most of the time, however, it is simply a matter of checking off dimensions and conditions of aspects of a home.
Organising home insurance
While a vendor will usually have an insurance policy that covers a property right up until settlement day, this period is a good time for buyers to organise their policy. Consumer Affairs Victoria recommends doing this before the seller signs the contract of sale, to protect everybody’s best interests from the moment settlement begins.
Every buyer has to pay land tax. While you have up to three months after the final date to organise this, you can organise it in advance to pay at settlement. Title transfer will not officially occur until all duties have been paid.
If you need to pay or work out how much land tax or stamp duty will be, the State Revenue Office is the place to go.
The transfer of title
Title for residential property goes to the Land Registration Services office. There is a lot of paperwork involved in this part of property settlement, so your solicitor or conveyancer should handle the process. Buyers officially take hold of the title on settlement day.
This is small but important step – you have to set up your water, power and gas (if applicable). This may require getting in touch with relevant companies or the local council – doing it in advance means the home is ready for you to move into.
When the 30, 60 or 90 days are up, the buyers will become the owner of the property. They pay the remainder of the balance, receive the keys and the sale is complete. It’s a lengthy process, but a crucial one. Without everything that happens in settlement, a sale can fall through due to legal minutiae, putting buyers and sellers at risk.
If you want to learn more about buying or selling in Melbourne, make sure to get in touch with the team at Nelson Alexander.