Congratulations! Your agent has done their magic and you’ve accepted an offer. Now all that stands between you and settlement is the buyers getting their finance and a couple of property inspections. Nothing to it, right?!

Not so fast.

Between now and settlement there’s plenty for you to do.

As far as settlement goes we’ve distilled your to-do list down to 6 jobs that you’ll need to complete if you’re going to have a stress-free settlement.

Step 1 : Provide Access For Inspections

Most likely your contract includes one or more special conditions entitling the buyer to carry out a timber pest and/or a structural report.

In most cases these reports provide the buyers with the assurance they need. But that’s not always the case.

When an inspection report identifies termite activity or a structural defect things can and do get messy. That’s when you’ll need time to source relevant tradespeople, get quotes, and negotiate a resolution. These issues can takes days or weeks to resolve, which is why it’s smart to provide access to the buyer’s inspectors as soon as possible.

Where possible the inspectors will want to gain access to the roof space. If your property has timber floors let them know about any previous trapdoors that have been cut. Doing so will allow them to complete a faster and more thorough inspection.

If your contract uses the REIWA 2018 General Conditions you’ll also be required to give the buyer access to the property within five business days of settlement in order to conduct a pre-settlement inspection. It’s best to get this done early in that five day period to allow you time to address any issues that may arise.

Step 2 : Book Your Removalist

Start thinking about who you’re going to use for your removal sooner rather than later. Who you choose is going to depend on how much you have to move, how far you’re moving, and your budget.

As settlement dates can and do change at the last minute, make sure that your removalist allows you to be flexible around your move date.

If you’re an owner/occupier and your contract includes the 2018 General Conditions then you have until 12 noon on the day after settlement to hand over the keys.

Step 3 : Arrange The Discharge Of Mortgage With Your Bank

If you’re paying off a loan then you’ll need to discharge the mortgage at settlement. That means the loan will need to be paid off in full and the correct paperwork lodged with Landgate. This paperwork is prepared by the bank but first your bank will need to have your written instruction that you intend paying out the loan.

Banks are notoriously fickle when it comes to the speed at which they process their mortgage discharges so it makes good sense to sign their discharge authority as soon as you’ve accepted an offer. The quickest way to do this is to drop into your local bank branch where you’ll be provided with their standard form to complete and sign.

If you owe the bank more than you’ll receive from the sale proceeds then you’ll need to make arrangements with the bank with respect to funding the shortfall. Because the bank won’t let your sale go through until your mortgage is paid, out any delay could cause you to pay penalty interest for the delayed settlement further compounding the problem.

If you’re using a broker, send them a copy of the contract and ask them to start the mortgage discharge process.

Step 4 : Address Any Of The Special Conditions Included In Your Contract

Now’s the time to check your contract again to start addressing any special conditions that are required to be met prior to settlement. Your special conditions can include:
  • Structural inspection condition. This requires initial action by the buyer but the inspection may reveal structural defects that you’ll need to rectify if you want the transaction to proceed. Starting this process early will allow you plenty of time to seek quotes for remedial work should they be required.
  • Termite or Timber Pest Inspection report condition. As with the structural report the initial action comes from the buyer but you maybe required to rectify any damage.
  • Working order clause. This is a common clause which requires you to ensure that all gas, electrical, and plumbing appliances (some clauses extend that to include other items such as reticulation, pool equipment etc.) are in working order at settlement. If you know the oven light doesn’t work get it fixed now. If the exhaust fan in the bathroom isn’t working, get it fixed. Your buyer is entitled to complete a pre-settlement inspection within five days of settlement. Leaving it to the last minute will only add to the stress.
  • Rectification and repair clauses. If you’ve undertaken to repair or rectify something start that work now. For example, if you’ve said that you’ll repair the damaged tile in the bathroom start the process of sourcing a qualified tradesperson now. We regularly see sellers leave these jobs to the last minute only to source a tradesperson who does a rough job and then find themselves having to do the job again.
  • Evidence clauses. These are clauses that require you to provide evidence to the buyer with respect to the improvements on the property. A typical evidence clause might include a requirement for the seller to provide evidence from the local council confirming that all buildings and improvements, including pool fencing, have the relevant approval.

Step 5 : Disconnect Utilities And Services

It’s your responsibility to disconnect services supplied to your property. The services you’ll want to disconnect include:

  • Electricity
  • Gas
  • Foxtel
  • Internet
  • Telephone
  • Alarm monitoring

Because water is a supply that’s attached to the property owner you don’t have to advise Water as this is done during the settlement process.

Along with these there are other people and organisations you’ll also want to advise of your move. These include:

  • Insurance company/broker
  • Accountant
  • Financial planner
  • Bank
  • Electoral commission
  • Department of Transport
  • Other government licensing departments
  • Australia Post
  • Lawn and garden contractor
  • Newspaper delivery
  • Pet groomer
  • Cleaner
  • Friends and family

If you’re selling an investment property the responsibility to disconnect these services rests with the current tenant, if they are moving out prior to settlement.

Step 6 : Create A Contingency Plan

Although your contract will most likely include a settlement date, don’t take this as a certainty.

Both yourself and the buyer have a grace period of three business days after the proposed date in order to effect settlement without incurring any penalties. And this grace period is used regularly by both buyers and sellers who meet with unexpected last-minute hurdles.

It makes sense, therefore, to not set your plans in stone. Taking a day off work to move is a great idea but it’s good to ensure your boss will allow you to change the day if your settlement is delayed. And keep in mind that settlement delays can happen on the day of settlement. While these last-minute delays are not common they do happen so it makes sense to prepare early.

And that’s especially the case if you’re selling and buying when things can go very wrong.

One of the simplest ways to overcome a short settlement delay that’s longer than the allowed grace period is to arrange to take early possession. But taking early possession is loaded with legal risk and should only be done as a last resort.

About the Author

Peter Fletcher

Peter began his real estate career in 1985 selling tin shacks and red dirt in Kalgoorlie. Moving to Perth in 1989 he quickly moved into agency ownership. By 2006, Peter had built a thriving agency managing over 600 rental properties. He then sold the business, taking time out of the industry to complete Honours in a Bachelor of Arts. Peter is now the Managing Director of Residential Settlements in Burswood and an active Army reservist. Peter has had just one hot shower since the 10th of May 2008.