What happens at Settlement – NSW
Once you enter into a contract for sale, you will be given an exact settlement date. It is important that you, your lawyer and lender are well prepared for settlement.
It is important that the purchaser carries out a final inspection of the property the day before or the morning of settlement. You should let your lawyer and the estate agent know if there are any problems with the property.
Settlement is pre-arranged well before the date of settlement. Settlement figures with rate adjustments are prepared and approved by both parties and the outgoing and incoming banks will have to be ready prior to settlement. Settlement will take place electronically, through PEXA (Property Exchange Australia).
A purchaser will be liable to pay stamp duty on the purchase. The purchaser’s lawyer will arrange for the stamping of the contract prior to settlement and stamp duty will be paid through PEXA at settlement. If the contract date is longer than 3 months, stamp duty will have to be paid prior to settlement.
Usually there are 4 parties that are involved with the settlement. The vendor’s lawyer and bank and the purchaser’s lawyer and bank. The lender authorises the loan and hands over the relevant funds to the purchaser, who pays out their existing loan with their bank which discharges the current mortgage on title.
At settlement the Discharge of Mortgage, Transfer and new Mortgage will be registered immediately at NSW Land Registry Services., together with the Notice of Sale which notifies the local council and water authority of the new ownership. Once registration has occurred and the funds have been disbursed electronically, settlement has been affected and the title goes to the Purchaser.
At settlement, the purchaser’s lawyer will provide an order on the agent to the vendor’s lawyer. This authorises the estate agent to release the deposit that the agent is holding, less their commission, to the vendor. Once the agent has this authority the keys can be handed over to the new purchaser.
With settlements now taking place electronically through PEXA, vendors now receive their proceeds of sale the same day as cleared funds, and the purchaser is registered on title as the new owner straight away. This has streamlined the settlement process to make it more efficient for all parties.
It is important to note that not all settlements run according to plan, and often settlement can be delayed during the day or even postponed to another day.It is therefore important that you refrain from booking in removalists for the exact time of settlement.It is advised that you should delay moving in until the day after settlement, as if settlement is delayed you may not be allowed to move in.
For further information please contact
Kristie Krainz
Principal Lawyer
T: 02 49209255
E: kristie@burnskrainzlegal.com.au
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