From signing to settlement: pre-settlement checklist

Congratulations! You’ve signed the contract on the home that will be your castle for years and decades to come. It’s important to take some time to savour this moment, so bookmark this article when you’ve finished your glass of champagne and have poured a cup of tea.

There’s a wide range of legal, financial and logistical things you’ll need to do to get ready for settlement. While there is no exact order or sequence that these tasks need to be completed in, those listed first be worked on immediately with the later ones having a little more time to get completed before settlement.

Ready? Let’s get to work.

Understanding the contract

Each state will have its own standard form of contract of sale of real estate. While many people will have had a lawyer or conveyancer look over it before they submit an offer or bid at auction, if you haven’t, now is the time to get familiar with any specifics. 

• How long is the period to settlement?
• How much is the deposit?
• Are there any special terms?
• Is the contract conditional on anything (e.g. you obtaining finance or a building inspection)?
• Is there anything in the Vendor Statement that needs further investigation?

Where the sale is by auction, there will be no cooling off period. However, if your offer has been accepted for a private treaty sale, then there may be a cooling off period, which gives you the opportunity to withdraw without significant penalty (there may still be some portion of the deposit forfeited).

Depending on the state, this can vary from two to five business days. Some states will not have any cooling off period.

Paying the deposit

Once you’ve signed the contract, an amount (usually 5-10% of the sale price) will be payable immediately. While there are many ways to pay the deposit, the two most common are:

Electronic Funds Transfer  – while near instantaneous it’s important to make sure you’ve increased your daily transfer limit before bidding at the auction.

Standard cheque  – Not many people have a cheque book these days, but they’re still good if you need to pay your deposit.

Bank cheque  – For the majority of people without a cheque book, these cheques are issued by your bank and guarantee payment to the depositor. The bank usually charges a small fee for this type of cheque.

Your deposit will be held in trust by the real estate agent until settlement. 

Notify (or appoint) a conveyancer and lodge a caveat 

Many people will have already appointed a conveyancer or lawyer to help them through this period and complete settlement. If this is the case, then they will have reviewed the contract and vendor’s statement prior to signing.

If you haven’t yet appointed a legal representative, now is the time to do so. They will want to see the contract of sale immediately.

Your conveyancer or lawyer will talk you through what to expect over the coming 30, 60 or 90 days. Almost all settlements nowadays are completed electronically through the PEXA platform. Your conveyancer will set you up with PEXA Key, an app that keeps you up to date with how settlement is tracking and lets you input personal details securely.

Finally, when you sign a contract of sale, you acquire a legal interest in the property. Lodging a caveat with the relevant Land Titles Office registers this interest and warns anyone who performs a title search on the property of this.

While there is a cost to preparing and lodging a caveat, it is small in comparison to the value of your investment. Lodging a caveat can reduce many risks, but a couple of common ones include protecting against a vendor who accidentally accepts a second offer for the property, and a secured creditor who is owed money by the vendor suddenly lodging their own caveat over the property (which will likely prevent settlement from occurring).

Notify your home loan lender (or obtain finance)

If you’ve already organised finance and received pre-approval, now is the time to notify your lender and provide them with your conveyancer’s details. Similarly, your conveyancer will want to contact your lender.

If you haven’t organised finance, consider this both urgent and important. The best course of action is to directly contact a couple of lenders, as well as a mortgage broker. Balancing getting the lowest interest rate with ease of application and likelihood to approve is something that will need careful attention.

The home loan application and approval process can take some time, especially if you are self-employed or require a high loan-to-value-ratio. Having said this, many banks have streamlined this process and are much faster than they used to be.

Finally, if one of the lenders you’ve approached directly quickly approves your loan at a great interest rate, you’re not obliged to sign with a lender that your mortgage broker has assisted you with.

Don’t wait - Get insurance now

Put simply, every state has a different set of rules when it comes to who is responsible damage to the property prior to settlement. Even in the states where the seller is responsible up until settlement (VIC, NSW, WA and the NT) it is still smart to take out building and contents insurance. 

Whether it be a falling tree, break in, water damage (roof, plumbing or sewer) or fire, why take a chance that the seller is not properly insured? This is your dream home, after all.

Important things to consider here include:

• Ensure you aren’t under-insured for the full cost of rebuilding, as most insurers will prorate their payout even when a partial rebuild requires less than the insured amount.
• Building insurance doesn’t cover furnishings such as carpets and curtains, so you need to take contents insurance as well.
• If you are uncertain as to what policy suits your needs, insurance brokers can be hugely helpful as they know the ins and outs of each insurer’s inclusions, exclusions and claims processes.
• Remember to revisit your policy and cover levels once you take possession. You’ll have a better idea of what level of cover you need and your new home will now be filled with all of your possessions.
  
  

Checking some details 

We’re getting closer to settlement now, so you can see the light at the end of the tunnel. By this stage, your conveyancer will be emailing and calling you about smaller matters.

By this stage, your conveyancer will have assembled a view of where funds are coming from and where they are going:

• Deposit
• Additional savings you’re contributing
• Stamp duty
• Transfer of land fees
• Conveyancing fees
• Adjustments (pro-rating charges like rates and water charges)

If there is anything you don’t understand, now is a good time to ask questions.

Your conveyancer may also ask you to check property measurements against the title, to ensure there are no issues that need to be addressed.

In a state like Victoria, the vendor may request an early release of your deposit. As your deposit is held in trust by the real estate agent, this may seem odd, but there is an advantage to the vendor getting access to the deposit early. Where the vendor makes this request, your conveyancer will talk you through the requirements in the legislation and whether you should object or consent.

Book the essentials

It will feel like there is not much left to do now, but if you’re moving shortly after settlement, its time to get prepared.

Booking essentials like movers and energy/internet are your responsibility and clearly should be done ahead of time. Your conveyancer will ensure that the council, owners corporation and new water provider are notified.

One pro tip is something that is often overlooked. Getting carpets and curtains cleaned in your new home will be infinitely easier when there is no furniture. Consider booking this in for the day or two before you move, as they need time to dry.

Pre-settlement inspection 

It’s been a few weeks or months since you signed on the dotted line and the nerves are building as settlement approaches. One key element of the process is a final inspection in the week prior to settlement. This is something that you’ll need to proactively organise with the real estate agent.

This inspection is your last opportunity to check that everything is in the same condition it was when the contract of sale was signed. It also allows you to ensure any agreed repairs have been completed.

Please take your time while at the inspection. While there is no set list of things to check, you should look at:

• Damage – check for new cracks in walls, broken windows, and water damage (incl. mould) to plaster and inside cupboards
• Appliances – check that the oven works and that the dishwasher hasn’t been removed
• Fittings and fixtures – check that any curtains/blinds are still in place and that the carpet has no new damage
• Heating and cooling – test all units in both modes to make sure they are still working
• Hot water – test hot water tap and check outdoor unit for leaks to ensure the system functions
• Gardens – check to ensure that the condition of the garden and landscaping is broadly as it was at the time of sale
• Pool equipment – check that pool filters and heaters to make sure they turn on
• Fencing – check that all perimeter fences are in the same condition as at the time of sale

If there are any issues, no matter how small, it is important that you raise this immediately with your conveyancer or lawyer. They will advise you on the best way to raise this with the vendor.

Settlement day 

The big day is here. By this stage, your conveyancer will have coordinated all necessary funds (your contributions and those from your home loan provider) to be in the right spot at the right time. Things will go quiet and then you’ll get the call that all has gone to plan.

In the coming days, your conveyancer should provide you with a final letter detailing where all monies were paid and a breakdown of their fees. Included in this will be a Statement of Adjustments.

Now to the best part. It’s time to call the real estate agent to pick up the keys.

Celebrate however you know best, but we recommend a takeaway dinner on milk crates with music on your phone and game of uno with loved ones. You only get this time once, so go make a memory with family and friends.