You’ve found your dream home; now you’re eagerly waiting for the big day—settlement day!
What is a settlement date?
It’s the agreed-upon day when you pay the property’s purchase price in full, ownership transfers, the seller hands over the keys, and your homeownership journey truly begins.
How Is the Settlement Date Decided?
During the contract negotiation phase, you and the seller, usually through your respective real estate agents, solicitors, or conveyancers, will discuss and agree on a settlement date.
This date is written into the contract of sale but isn’t set in stone until both parties sign the contract.
Standard settlement periods can range from 30 to 90 days, depending on the following factors.
- Finance Approval: Time needed for the buyer’s lender to approve and prepare the loan.
- Building Inspections: Scheduling and completing any required property inspections.
- The Seller’s Moving Schedule: Ensuring the seller has time to vacate the property.
What Happens on Settlement Day?
The Lender Releases the Funds
Upon settlement, your home loan provider will transfer the approved loan amount to the seller’s bank to cover the property’s purchase price.
This payment typically includes adjustments for any negotiated costs, such as council rates, water rates, or strata levies that have been prepaid or are owed by the seller, ensuring costs are fairly divided between both parties.
The Seller Receives Confirmation of Payment
Once your home loan provider transfers the funds, the seller’s solicitor or conveyancer will receive formal confirmation.
Now that the financial side of the transaction is complete, the seller can finalise their obligations, such as settling any outstanding mortgage on the property.
Legal Documents Are Finalised and Handed Over
It’s time to wrap up the paperwork!
The Transfer of Land document puts your name on the property title, officially changing the ownership record at the Land Titles Office in your state or territory.
This step confirms the legal transfer of property ownership from the seller to you.
Other documents to be finalised can include
- Mortgage Documents: Legally binding agreements between you and the borrower outlining the loan terms used to purchase the property, including securing the property as collateral for the loan.
- Transfer Duty Form/Stamp Duty Declaration: Required by state or territory revenue offices in Australia to calculate and collect the tax payable on the transfer of property ownership.
- Rates Certificate: Issued by the local council, providing information about the rates associated with a property, including any outstanding amounts.
Your conveyancer or solicitor can handle all of this paperwork, making sure everything is correct and legally sound.
The Agent Arranges for the Transfer of Keys
After settling all financial and legal matters, the real estate agent will hand over the property’s keys to you, often at the property itself.
This marks the official moment you take possession of your new home—congrats!
Ready for Settlement Day? Let Pherrus Guide You!
What is a settlement date?
It’s an exciting day when the property is finally yours!
But there’s more to the homeowning journey than just buying a property.
You’ll need to calculate and pay capital gains tax and know what deductions to claim if the property is an investment to reduce the tax you owe and maximise your investment returns.
Sounds confusing? Time-consuming?
As specialised property accountants, we can help you with all that, saving you time, stress, and money.
Contact us today by filling out our online form or calling (02) 9099 9109 to book an appointment at our Bella Vista office in Sydney, NSW.
FAQs About “What Is a Settlement Date?”
What Does Settlement Date Mean?
On the settlement date, the buyer transfers the funds for the property, and the seller legally transfers property ownership to the buyer.
What Happens on a Settlement Date?
- The buyer’s lender transfers the loan amount to the seller’s representative.
- The seller’s representative receives payment confirmation from the buyer’s lender.
- Legal documents are exchanged and lodged to update the property’s ownership.
- The real estate agent gives the property keys to the buyer once the settlement is confirmed.
Can You Move In on Settlement Day?
You can usually move in on settlement day once the funds transfer, ownership updates, and the agent hands over the property keys.
However, check your contract; some agreements may set a later move-in date.
How Long Does Settlement Take?
Settlement generally takes 30 to 90 days, depending on the contract terms, finance approval, and property inspections.
What Happens if Settlement Is Delayed by the Buyer?
If the buyer delays settlement, they may incur penalty interest, additional fees, or risk the seller terminating the contract.
