Property Settlement Tips Home Buyers Must Know

Property Settlement Tips Home Buyers Must Know

Congratulations! You have come more than half a way and you are just about to enter into your dream home. Making such a big purchase is an achievement in itself.  

The excitement of making such a big purchase multiplies and the feel of butterflies fluttering in the stomach increases as you move closer to your dream. The process of buying a home in Hampton Park, Narre Warren, or Pakenham is not as easy as it may seem. Besides money, you need patience, will, and a lot of knowledge to make a smooth path for yourself to reach your goal. Congrats once again because you have come across a long way and now this is a time to do property settlement.  

What is Property Settlement in Australia? 

Terms and Definitions  

Property settlement is the process of transferring property ownership to the buyer. This step is crucial in selling a property which is best navigated with the assistance of a lawyer or a conveyancer.  

Definition as per the Australian law – The law regulating property division, also known as property settlement is contained in the Family Law Act 1975 (Cth). A property settlement should cover all of the property, both assets and liabilities between the parties. It should take into account the whole financial situation of each party. 

What is Property Settlement Order? 

It is an agreement between spouses which provide for the division of their assets between them in case of a relationship breakdown. 

What Happens During Property Settlement? 

Property settlement is a legal process facilitated by your legal and financial representatives (those of a seller). It is a time when ownership passes from the seller to the buyer (that is you) and the buyer pays the balance of the sale price. The settlement date is set and given in the contract. 

Now, let us understand the stages of a property settlement. This is a final stage and this last step will make a huge difference in your life. If you are buying a house in Hampton Park, or nearby suburbs, then it is suggested to employ a local real estate agent.  

For instance, you can hire real estate agent in Hampton Park itself or if you are looking for a real estate agent in the nearby suburbs, contact a real estate agent in Pakenham, Narre Warren. Manny Singh, the best real estate agent is a one stop solution to all your real estate needs. So, call now. 

Calculating Property Settlement  

Calculating Property Settlement 

The aim of a property settlement is to establish a legally binding agreement that satisfies the needs of both parties, including children if affected by the change in circumstances. The binding agreement can be ordered by the Family Court of Australia, if necessary.  

Choosing a right pathway towards a property settlement can be tricky, so before making any rash decisions, it is worth investigating a range of property settlement calculators. When you are clear on the overall financial position, you will be able to enter into the final negotiations with utmost confidence. However, the Australian Securities and Investments Commission provides a range of calculators at www.moneysmart.gov.au which gives you a clearer picture for moving forward.  

Settlement Time Period 

The settlement date is already set in the contract of sale but as a general rule, property settlement periods are 30 to 90 days long. The time period can be longer and shorter too completely depending on the situation.  

The Things that Can Go Wrong on the Property Settlement Day 

Buying or selling may seem an easy ride but it is not because hiccups may happen. Do not get bogged down by these because hiccups rarely happen prior to the property settlement day. You may come across some of the common situations such as missing documents, delayed cheque issuances, no-show conveyancers, and other unforeseen circumstances which can affect your financial decision. 

The Stages of Property Settlement are as follows: 

  1. Exchange of Contracts 

Exchange of Contracts

The first step is to legalize the sale by exchanging the sale contracts. Two copies of sales contract are kept, one for the seller and other for the buyer. Each copy is signed before exchanging it between both the parties. If you have a real estate agent, this process will be facilitated by your local real estate agent, or your solicitor, or conveyancer.   

When the contracts are exchanged, the buyer will be required to pay a deposit, which is normally kept at 10%. This will be held in trust by your local real estate agent or even your conveyancer. 

Importance of this Step: 

  • The buyer and the seller (both the parties) are not legally bound until signed copies of the contract are exchanged between the two. 
  • If you sell your property at auction, there is no cooling off period. The buyer is legally bound to buy the property once the contract gets exchanged. 
  • If you sell a house by a private treaty, there is normally a five-day cooling off period. In this time, the buyer can withdraw from the sale or waive off, extend, or even reduce in your contract. So, you must stay aware about it. 
  • Generally, a vendor or a seller does not have a cooling off period. Once the contracts are exchanged between the parties, the agreement is bound to be completed. 

2.Prepare for Property Settlement 

The time between the contract exchange and settlement, differs. However, the average time is normally six weeks. It allows time for buyers to get their finances sorted. For you as a  vendor/seller, you can fulfil special conditions outlined in the contract of sale.    

For instance, your property settlement contract may have stipulated time frame in which you may have to complete repairs or maintenance on the property work. You must make sure that these tasks are carried out before settlement day or you may get into a risk of breaching the contract.  

3.Pre-Settlement Inspection 

As you approach settlement day, the new buyer will have an opportunity to inspect the property. Even though these are not compulsory, buyers usually want to use this time to check nothing untoward has happened to the property. This also enables the buyer to check if you have completed any outstanding jobs required as a part of the property settlement contract. 

4.Finalize the Transfer Documentation 

Your solicitor or conveyancer or the real estate agent will contact the buyer’s legal representative to ensure all conditions of the contract are duly fulfilled. They will also arrange for the balance of your loan to be paid off. At this time, the buyers home loan will also be registered against the property title. 

Also, your legal team will make sure that all necessary property taxes, land transfer duties and water rates are paid. Once everything is settled, the transfer documents will be completed and then lodged with the land registration office in your state or territory. 

Assuming all goes as per the plan, the new buyer assumes legal ownership of the property and voila, the keys are handed over. 

5.Completion of the Property Settlement 

On the completion of change of ownership, your legal team will notify you. Also, your lender will provide you a summary of your loan repayment, interest and any penalties necessary in finalizing your home loan debt. 

After these five steps are done, take a deep breath, break out the news with champagne, celebrate because now the property is officially yours.  

Congrats to the new, happy, and satisfied owners. 

 

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