Making a settlement day checklist will help you keep everything straight during settlement

Imagine: after months of searching for the right property in the right neighbourhood, or attending auction after auction, you’ve finally found yourself your dream property. A contract of sale has been drawn up between you and the vendor, and the home loan settlement, which usually lasts between 30 and 90 days, has been outlined in the contract. But what now?

The settlement process is pretty complicated and involves many moving parts, but at the end of this period, everything comes together on settlement day and the property will legally change hands. Provided, of course, that you’ve got everything in order.

To help with that, here’s a comprehensive checklist of the things you’ll have to accomplish on settlement day:

1. Confirm the important details

You will need to confirm the date, time, and venue for settlement on the property.

A number of important exchanges will take place on settlement day. This is the day your mortgage will go into effect, and your lender will have to pay the balance of the purchase price to the vendor. Other fees and duties payable to the government will also be paid on this day. Additionally, your conveyancer will receive the property title and officially register you as the new owner.

These exchanges will occur in a meeting between your conveyancer and the vendor’s conveyancer, and your lender’s representative might be present as well.

Normally you yourself are not expected to attend the settlement, however you may take any cheques required for settlement to your solicitor, or you can arrange to have these delivered the day before.

2. Prepare the money required for settlement

If you haven’t arranged a loan, then you will have to arrange for bank cheques (not personal cheques) for settlement. Alternatively, you may have cleared funds in an account that your lender is authorised to draw funds from.

If you have arranged a loan, your solicitor will usually ask your lender to deliver the cheques available from the proceeds of the loan to settlement. Your solicitor should have the lender cheques on the business day before the appointed settlement date.

Make sure that all the information on the cheque is correct. If there is a spelling mistake in the name or an error in the amount on the cheque, settlement could be delayed and you could incur interest under the contract and other fees and charges for late settlement.

The vendor can determine how the balance of the purchase price must be paid on settlement, and this is often done by directions for payment. For example, the vendor may ask you to provide cheques to pay for rates owing or pay legal fees. However, the money would have to come from the vendor’s sale proceeds, not out of your pocket.

3. Check the registration fee

If applicable, the vendor will allow you a credit for any registration fee that must be paid to the Land Titles Office for the removal of the vendor’s mortgage from the title. Your solicitor may discuss with you any dealings that would have to be removed.

4. Approve the settlement statement

Just prior to settlement day, you should receive a settlement statement from your solicitor. This will outline the funds required for settlement, and will need your approval.

Depending on the circumstances, it might be difficult for your solicitor to get this information to you early, as they will be waiting to receive information from your vendor’s solicitor, who in turn is waiting to receive it from the seller’s lender.

5.Conduct the final inspection

On the morning of settlement day, you should inspect the property one final time to ensure that everything is in order. The property should be in the same condition that it was before the exchange of contracts. To safeguard yourself, it is advisable to take photographs and date them.

If you’ve listed any items you consider to be fixtures and chattels in the contract, make sure they’re still there during the final inspection. Finally, if you have any issues that you want to raise, do so before settlement.

6. Check your solicitor’s tax invoice

You may receive your solicitor’s tax invoice on settlement day. Your solicitor may provide another tax invoice if there are any additional professional fees and/or disbursement incurred as a result of additional legal services necessitated by settlement.

7. Check the adjustment for local council rates

The settlement sheet will usually show the adjustment for local council rates. These rates are adjusted between the vendor and the buyer. At the date of settlement, usually the rates owed to the council are paid in full from the vendor’s money, and the buyer’s share is refunded to the vendor by means of an addition to the purchase price.

Your solicitor is likely to follow the usual process, and the local council will be notified that you’re the new owner of the property.

8. Adjust your water and sewer charges

In metropolitan and regional areas, relevant bodies will charge for water and sewer availability, as well as water usage (these will differ depending on your state). The water rates usually run quarterly, and upon settlement, will generally be paid to the end of the current quarter by the vendor.

Water and sewer charges are adjusted between the vendor and purchaser on the settlement date. You will only have to pay the rates and charges for the time after you complete your purchase, or after the time agreed upon with the vendor

9. Follow up on the registration of your title

If you have a loan, then your lender/mortgagee will register the transfer and mortgage at the Land Titles Office after settlement. The mortgagee will hold on to the Certificate of Title as part of the security for the loan. Alternatively, your solicitor will arrange registration of your title.

10. Adequately insure the property

It is vital that you adequately insure the property. This includes contents insurance, landlord’s insurance (if you’re going to lease the property), and Home Owners Warranty Insurance (if you’re going to carry out building work at the property).

11. Collect the keys

The keys may be collected from the real estate agent after settlement. It’s highly recommended that you consider changing the locks on your new property after settlement.