Simply put, a property settlement is the legal process of transferring property ownership from one person to another. It is important to understand the steps involved in a property settlement, as this will help to ensure a smooth and stress-free transaction.

From exchanging documents to paying deposits to applying for a mortgage, understanding key dates and timelines is essential in making sure all aspects of your real estate settlement are handled correctly. This article will provide an overview of the property settlement process.

When a property is sold, the settlement process begins

When a property is sold, the settlement process begins with exchanging contracts and information between the buyer and seller and their respective representatives. Mortgage documents need to be prepared, title searches may have to be conducted, and various due diligence such as building and pest inspections may be required before possession of the real estate is handed over to the new owners.

In order to ensure a smooth process, communication between all parties must be timely, accurate, and clear. It is important to ensure that each side has what they need to proceed with the transaction and complete the sale. During this time both parties must be organised and compliant with local regulations related to real estate settlements, such as providing disclosure of all known defects in the property before the sale.

There may also be Government incentives available such as First Home Buyer grants that you may want to co-ordinate to contribute to your settlement funds. Proper handling of the contract and settlement process is critical in making sure you minimise the stress during this time and are ready for Settlement day.

Holding deposit when the property goes under contract

When a buyer and seller come to an agreement on a property, the buyer may be required to pay a holding deposit to the seller as part of the contract. Generally, this deposit will be held in the trust account of the Real Estate Agent or Solicitor until the time of Settlement.

This holding deposit is usually used as part of the Settlement funds and is offered as a show of good faith on behalf of the buyer, ensuring their commitment to buying the property.

It also incentivises sellers to take their properties off the market while they wait for settlement and should indicate that all parties involved are working in good faith toward the same goal.

Special Conditions and Settlement Date

Your Solicitor should be across the schedule of key dates and clauses and let you know the time frame to fulfil any of the conditions of your contract such as building and pest inspections and finance approval. However, at the end of the day, this is your property purchase, and it is important for you also to understand the process, so no important dates are missed.

Special Conditions are often included in a contract to allow the buyer to undertake due diligence. When a contract is exchanged, the seller and buyer will typically agree on a settlement date contingent on these Special Conditions being met.

Special Conditions cover any stipulations about the property, such as repair conditions that must be met before or after settlement and details regarding deposits. Other common conditions are Building & Pest Inspections – if the property has a poor report, this is a common clause that will generally allow the buyer to exit the contract or renegotiate based on the new information and repair costs for any building and/or pest issues to be resolved.

Another common condition in a property contract is a Finance Clause. Although the buyer may have pre-approval, their financier won’t agree to their loan without a copy of the contract and undertaking their own investigations. If the financier determines that they won’t lend the funds, or as much as expected, this condition generally allows the prospective purchasers to exit the contract under the finance clause.

Special Conditions are important to consider in any real estate transactions, and when you speak with your Solicitor or Conveyancer, it is recommended that you become familiar with any Special Conditions to ensure your interests are protected.


Meeting your Finance Condition

Once a buyer and seller have exchanged contracts, the next step is to apply for a mortgage. Applying for a mortgage can be an intimidating process, but it doesn’t have to be. With the right information and preparation, you can make sure that your application goes as smoothly as possible.

You can speak to a Mortgage Broker at any time during your purchase. We recommend talking to us as early as you can so that you understand all costs associated with your purchase and your borrowing capacity. We will likely need extra documents to support your loan application once you have a contract.

It is important to supply all the documents we need as soon as possible. Applying without the correct documents increases the chances of the lender requesting more documents and delaying the loan process.

You may even consider securing pre-approval before you put in an offer on a property. Your pre-approval is not a guarantee for funding, but it does speed up the funding process and give you clarity about your loan options. The Finance Condition allows buyers to exit the contract if they can’t successfully secure funding. There will usually be a time limit on how long you have to investigate your funding options so you must send a copy of your contract to your Broker as soon as possible so they can start the process.

If you don’t have the finances to settle confirmed during the timeframe set in the contract, you may need to request an extension. Otherwise, the Seller may have the right to cancel the contract. If there are delays in securing your finance, such as the lender’s processing time, we can work with you and your solicitor to request an extension to your finance clause.


What happens on the day of settlement?

At Settlement, the seller pays the purchase price and keys are handed over to the buyer. Typically, a Settlement time will be ‘booked’ when titles and funds are exchanged. The Conveyancer or Solicitor for both sides will coordinate communication to take care of the finer details. Communication is key in your Settlement, so all finances, checks and documents are completed and ready on the settlement day.

The real estate settlement process can be a complicated and overwhelming experience for buyers and sellers alike. Understanding the timelines and conditions is important to facilitate a smooth settlement. Seeking the advice of a professional is always recommended to make sure your interests are protected and that you understand the process.

With careful planning, preparation and understanding of all relevant conditions attached to your property purchase, you can be confident in knowing that your settlement will go as smoothly as possible.



Terms are subject to approved persons only. This information is true and correct as of 17/12/2022.  All of the content above is general in nature and may not suit your personal needs, situation objective & goals.