Settlement date is the date on which your property transaction is completed and ownership of the property is transferred to you. Buyers and sellers alike are generally eager to have settlement completed as soon as possible, but it’s important to allow a suitable amount of time for settlement to be completed – because if you miss the date, you may have to pay expensive penalty interests. Settlement generally takes about 45 days, but you’ll need to allow extra time for settlement if:
- The seller is overseas. New identity check regulation means the seller will need to travel to an Australian consular to sign the contract and other documents, which may take extra time. The seller is also required to deal with original documents only, which will add extra time as the documents are posted between countries.
- There’s a tenant in the property. If they’re on a periodic lease, the seller will need to give them 30 days notice that they need to leave. If the tenants are on a fixed-term lease, you’ll need to wait for the lease to expire before you can move in. (Update: since this article was published, tenancy laws have changed.)
- There’s a caveat on the Title. Encumbrances, such as caveats, may take negotiation to remove.
- There’s a mortgage on the property. The seller will need time to discharge this.
- Your contract includes inspection clauses. If the transaction is subject to a Timber Pest Inspection, an Electrical Inspection, a Structural Inspection, and/or any other inspections, it’s important to allow extra time to organise these and have them conducted. (If you don’t allow enough time and you miss the deadline as a result, the benefit of the clauses is often waived!)