What happens at a conveyancing settlement?

The conveyancing process when you are buying or selling property can often take a month or more. Between signing the contract, exchanging, and then preparing for settlement, there’s a long lead up to the day of settlement. Then comes the settlement time, and 10 minutes later it’s done. So, after all that lead up, what exactly happens at a settlement?

The simplest answer is that the purchaser pays the purchase price and the vendor hands over the title to the home. But of course, there’s a lot more to it.

Who is involved?

Multiple entities are present during a settlement. These include the purchaser’s legal representative, the purchaser’s bank if they are obtaining a mortgage, the vendor’s legal representative, the vendor’s bank if they have a mortgage on the property, and also the NSW Land Registry Services.

By the day of settlement, everyone will have prepared all the documents to be lodged, giving effect to the transfer. These include, among other things,  the purchaser’s mortgage that is to be registered, the vendor’s discharge of mortgage allowing removal of their mortgage from the title, and of course, the transfer document, which tells the NSW Land Registry Services the property being transferred, the name of the current owner, the name of the new owner, and the price paid.

The respective solicitors will have prepared a statement of adjustments, setting out exactly how much money is to be paid by the purchaser to the vendor. The amount payable on settlement is different to the purchase price, as it will have been adjusted to ensure the purchaser and vendor are paying for their respective portions of outgoings, such as the local council rates. When the amount to be paid to the vendor has been calculated and agreed upon, the solicitors then arrange for the transfer of money at the time of settlement.

So, everything is prepared, and figures are confirmed. What next? Well, now, settlement can start. Every participant involved in the settlement will review all of the relevant documents and payments and “sign off” on them. This process not only enables us all to ensure we agree with what the other participants have done, but also helps to reduce the risk of any mistakes being made, as everything is checked by a minimum of 2 different entities. When everyone involved has “signed off” the settlement starts. The payments are made, including the money owed to the vendor, the solicitors’ legal fees, and any other miscellaneous fees such as bank and settlement fees. At the same time as these are being distributed, the documents are all being lodged with NSW Land Registry Services. The vendor’s mortgage is being removed and replaced by the purchaser’s mortgage, and the name on the title is being changed to the purchaser’s name.

 As soon as settlement is over, you will get a call. If you’re purchasing, the real estate agent will have been notified that settlement has taken place and they will be ready to hand over your keys. If you are selling, you will receive your sale proceeds, usually within the hour, cleared in your account.