There’s lots of jargon when you’re buying a home, and do you know what? You’ll only ever need to know what they mean when you’re going through the process. It can seem like the banks and solicitors have made up these words (and maybe they have) so let me make sense of one for you today – settlement date.
What is it?
This is simply the official day that ownership of the home transfers to the person that’s buying it. You may also hear this described as the ‘title’ of the property being exchanged.
The day when money and property title are exchanged between buyer and seller and ownership of the property officially transfers to the buyer.
Just before settlement
Your broker and solicitor will keep in touch with you in the run up to your settlement date.
They will let you know if there’s anything you need to do. Usually this is making sure that your solicitor has your deposit on settlement day so that it can actually happen!
You can also go and have another look at the property before you settle. This is called a ‘pre-settlement inspection’. If you included anything in the contract that needed doing (known as a ‘special condition’), like repairing a broken fence, it’s recommended that you take a look.
Your solicitor will help you if you have any questions about what you should include as a special condition on the contract. You can find out more about contracts on this helpful government website.
So what happens?
Your solicitor, your bank, the seller’s solicitor and the sellers bank all get together, usually at seller’s bank or the seller’s solicitor office. You don’t need to be there – but have your phone handy in case they need to get in touch.
Then, after those weeks of planning and organising, the actual change of ownership only takes about 5 minutes! It’s amazing. More than 1.5 trillion loans are settled each year in Australia, so the process has been practised a few times and is really well organised.
When is Settlement Day?
You will have agreed settlement day as part of your contract, and each one is different. You can only change this if both you and the seller agree.
If you miss the agreed settlement date you may be ‘in breach of contract’, meaning that you have not done what you said you would do. This can mean that the contract can be terminated completely by the seller and you may have to pay a substantial penalty.
So, it’s best for buyers and sellers do everything they possibly can to make sure they hit that agreed settlement date.
After Settlement Day
If you’ve taken out a home loan your broker will have given you all of the information about how it will work. Settlement day, as well as the day that the property becomes yours, is also the day that your home loan officially starts. Your lender will confirm your payment to you, and interest will start to be charged by them.
If you have any questions, get in touch with your broker. There’s been a lot to take in and they won’t mind you asking as many questions as you need to. After all, your home is probably the biggest purchase you’re going to make.
Key points
- Make sure you seek legal advice
- Ask your broker as many questions as you like – there’s no such thing as stupid question
- Keep to the settlement date in the contract
- Enjoy your new home!
Although I am giving you general information here, it’s not legal advice. You should always seek independent legal advice in relation to any matter regarding settlement conditions and contracts. If you need a solicitor, your broker can usually help you to find one.
