When you make the decision to buy or sell a property in Queensland you’ll come across the term ‘settlement’ quite often. But what exactly is settlement and what does it entail?
The term settlement is the final step in the conveyancing process and refers to the day on which the representatives for each party, including their lawyers and financiers, meet at a pre-arranged time to exchange documents and purchase funds. The transfer documents and release of mortgage, if applicable, and handed to all parties for a final check of their accuracy and completeness.
If these documents are all in order then the settlement funds, most commonly in the form of bank cheques, are provided by the buyer’s solicitor to the seller’s solicitor and their financier, if applicable. These parties then verify that these cheques are to the correct parties and for the correct amounts.
If all documents are complete and accurate and the purchase funds are all correct and accurate then the parties will agree to settle the property and settlement will be complete, passing ownership from the seller to the buyer.
Following settlement the transfer documents will need to be registered with the Land Titles Office. This process is done by your financier, or if you do not have one, by your lawyer. The registration of these documents formalises the transfer of ownership of the property and concludes the conveyancing process.
Settlement Price Adjustments:
As part of the settlement process and prior to settlement taking place, your lawyer will calculate the final settlement figure for the property. This final settlement figure will be different to the amount you agreed to pay for the property upon signing the contract of sale, due to the fact that it apportions the various costs of property ownership between the parties.
These costs include, rates, water, insurance and body corporate fees. They are apportioned based on whether they are paid or unpaid and the date upon which they fall due.
For example, rates on the Gold Coast are due twice a year. So, if you purchased a property in September and the settlement day was September 20, then you would pay the rates from September 21 until December 31, and the seller would pay the rates from July 1 until September 20. If they had already paid their rates then this amount would be added to the settlement price, while if they had not yet paid them this amount would be deducted from the settlement price.
The same goes for water charges, insurance and any other costs associated with the property you are buying. If the property has tenants in it, who will continue to rent the property following settlement, then an adjustment will also be required of this rental income.