Settlement day is the final step in the property transaction process, where ownership of the property officially transfers from the seller to the buyer. It involves financial, legal, and practical considerations for both parties. Understanding what happens on settlement day can help ensure a smooth transition and avoid last-minute complications.
Timing of Settlement
The settlement period is negotiated between the buyer and seller when signing the contract of sale. While there is no fixed timeframe, typical settlement periods are:
- 4 to 6 weeks after signing the contract (most common)
- 30 to 90 days, depending on the agreement between both parties
Both buyers and sellers should be financially and logistically prepared to meet the agreed settlement date to avoid penalties or delays.
What Happens on Settlement Day?
Settlement day involves multiple parties, including the buyer’s and seller’s solicitors or conveyancers, banks, and the real estate agent. The key steps include:
- The buyer pays the remaining balance of the purchase price
- The title of the property is transferred to the buyer’s name
- The buyer receives the keys and legal possession of the property
- Any mortgage on the seller’s side is discharged, and the new mortgage (if applicable) is registered for the buyer
Buyers and sellers usually do not need to attend settlement in person. Their legal representatives will handle all necessary paperwork and financial transactions.
Real Estate Agent’s Role
The real estate agent facilitates the financial side of the transaction. Their responsibilities include:
- Holding the deposit in a trust account until settlement
- Deducting their commission before releasing funds to the seller
- Ensuring keys are handed over to the buyer after settlement
After settlement, the agent must provide the seller with a written statement detailing:
- The total amount received from the sale
- How funds were allocated
- Any commissions, discounts, or benefits received from third parties
This statement must be provided within 42 days of settlement, or within 14 days if requested earlier.
Buyer’s Considerations
Before settlement, buyers should:
- Ensure loan approval is finalised and that their lender is ready to transfer funds
- Conduct a final pre-settlement inspection to confirm the property is in the agreed condition
- Check financial adjustments for rates, water, and other costs to ensure a fair division between the buyer and seller
Seller’s Considerations
Before settlement, sellers should:
- Ensure all outstanding rates and utility bills are paid up to the day of settlement
- Leave the property in a clean and agreed-upon condition to avoid delays
- Discharge any existing mortgage on the property
If the property is not vacant (e.g., tenanted or part of a lease agreement), the seller should ensure the correct tenancy transfer process is followed.
Adjustments for Council Rates and Other Fees
Financial adjustments ensure that both parties pay only their fair share of property-related expenses. On settlement day:
- The seller pays council rates, water charges, and other fees up to and including the day of settlement
- From the following day, the buyer takes over these obligations
The conveyancers or solicitors will calculate adjustments so that costs are fairly split between the two parties.
Pre-Settlement Inspection
Buyers have the right to conduct a final inspection before settlement to ensure:
- The property is in the same condition as when they signed the contract
- Fixtures and fittings included in the sale remain in place
- The seller has met any agreed-upon conditions (e.g., repairs)
If the property is not in an acceptable condition, the buyer can raise concerns with their solicitor, which may delay settlement until the issue is resolved.
Ensuring a Smooth Settlement
Both buyers and sellers should plan ahead to ensure a hassle-free settlement process.
- Buyers should confirm loan arrangements early to avoid last-minute delays
- Sellers should clear all financial obligations related to the property before settlement
- Both parties should work with experienced solicitors or conveyancers to handle title transfers, financial adjustments, and legal compliance
If you are buying or selling a home in Queensland, Ensure Legal can provide expert guidance throughout the settlement process. Contact us today for professional legal assistance.
