How does the settlement process work in Queensland
Property settlement is a complicated process. We break down the five main steps in Queensland property settlement.
So you have found the home you would like to buy and are a little confused about the process from here-on-in? Take note of the following five steps towards finalising your property transaction
1. Make an offer
Approach the Seller or their agent to make an offer. The sale contract is usually prepared by the real estate agent and presented to the buyer. Engage a lawyer or conveyancer to act on your behalf, as they will advise you on the terms of the contract, your obligations, and whether or not you require any special conditions in the contract. Property searches take time, so the sooner a lawyer is engaged the better.
The real estate agent will usually deliver the contract signed by the Buyer to the Seller, who will decide whether or not they accept the Buyer’s offer to purchase. If they accept the offer, the seller will sign the contract and the conveyancing process will begin.
Until settlement, the property remains in the possession of the vendor, however, risk passes to the purchaser so it is recommended that the property is immediately insured with a building insurance policy.
2. Pay the deposit
Once the offer has been accepted by the Seller, the Buyer must pay the deposit stipulated in the contract. The due date for payment of the deposit is specified in each individual contract but generally, the deposit will be payable upon the signing of the contract. It is an essential term of the contract that the deposit is paid when due. If the Buyer does not pay the deposit when it is due, the Seller will have rights against them.
3. Fulfil your obligations under the sale contract
i) Insurance
The terms of the standard contract provide that the property is at the Buyer’s risk from 5:00pm the day after the contract date. Therefore, insurance should be purchased as quickly as possible.
ii) Finance
Queensland contracts are usually subject to finance unless the buyer has cash. This means that you will be given a certain amount of time to organise a loan on terms which are satisfactory to you. If you are unsuccessful in obtaining finance on terms satisfactory to you, you will have a right to terminate the contract without losing your deposit.
iii) Building and Pest
Most residential contracts are subject to a satisfactory Building and Pest inspection report as well. You have the right to have the property inspected by a licensed building inspector at your own cost who will provide you with a building report. If the report contains significant defects, you will have the right to terminate the contract without losing your deposit. Alternatively, you may choose to renegotiate the contract terms or price.
It is very important to liaise with a lawyer when fulfilling your obligations under the contract to ensure that your rights are at all times protected.
iv) Stamp duty
Buying property in Queensland is a dutiable transaction, which means that stamp duty may be payable. Your lawyer will be able to tell you how much duty is payable on your purchase and whether or not you eligible for any duty concessions or grants. Your lawyer will also facilitate the payment of the stamp duty.
4. Prepare for settlement
Once satisfactory finance has been obtained and you are happy with your Building and Pest report your lawyer will liaise with your lender to ensure that sufficient funds are available for settlement.
Your solicitor will calculate any adjustments with respect to outgoings on the property and organise cheques to be drawn by your financier. Under the standard terms of the purchase contract, you have the right of one final inspection of the property to ensure that the property has remained in the same condition as initially inspected.
5. Settlement
Settlement is the day that the title is handed over to the buyer (or his solicitor) in exchange for the remaining money owed on the purchase. This is usually done at an agreed location where both parties’ lawyers meet to exchange cheques and documents with each other and the parties’ banks. After settlement has been effected, the transaction is complete.
The vendor’s solicitor will contact the real estate agent that sold you the property and instruct them to release the keys to the property to you. Your solicitor will contact you to confirm settlement has taken place. They will also send you a Statement of Adjustment to show you how the funds have been disbursed to all parties involved.