Congratulations, the sellers have accepted your offer! But now isn’t the time to relax!
Far from it!
There are a lot of factors that can delay your settlement but what you do next will maximise your chances of settling on time.
A delay of a few days – hours even – in attending to some settlement jobs can potentially cause lengthy and expensive delays to your settlement. And, because we want your transaction to settle on time, we’ve outlined the following six things that need to be done ASAP.
Step 1 : obtain finance by the due date
It’s important to start the process of obtaining formal finance approval the moment your offer has been accepted. By doing so you help avoid the risk of another buying swooping in and possible delays in settlement that could cost thousands in penalty interest,
Don’t make the mistake of relying on a pre-approval!
The finance approval process starts with sending a copy of your contract to your banker or finance broker. Do this immediately!
And there are a lot of things that can delay your finance approval. These include:
- Your bank could be experiencing a staff shortage or change in processes
- Delays in providing information such as bank statements and tax returns to the bank
- Public holidays that occur during the finance approval period
- Complex funding arrangements and refinances
- Recent purchases financed by consumer credit (typically including interest free payments)
Send your finance approval letter to your settlement agent as soon as it’s received. Don’t rely on your bank and broker doing it for you!
Step 2 : pay your deposit on time
In the excitement of negotiating and having their offer accepted many buyers forget to pay their deposit as required by the contract. It’s an important part of the process that shouldn’t be overlooked.
If your deposit isn’t paid on time your contract can be terminated by the seller.
Granted, that’s less likely to happen in a slow market but it can and does happen. Don’t let it happen to you!
Your deposit payment can be delayed by limits imposed by your bank on the amount you can transfer at any one time.
If you have a limit, allow for the extra days needed.
Don’t assume that just because you intend to pay the deposit that the seller will be happy with the payment being late.
Step 3 : organise building and timber pest inspections
If your contract includes a building, termite or timber pest inspection clause start work on selecting your inspector now.
Why?
Most building inspection clauses include wording that cause you to lose the benefit of the clause if you miss a deadline for completing the inspection.
Miss the deadline by even a few minutes and you could be forced to buy a property that’s structurally unsound!
The key here is to allow plenty of time to complete the inspection, especially where the property is currently occupied. A time that suits the building inspector may well not suit the owner or tenant. If you leave making these arrangements too late then you could miss the all-important deadline.
And it’s important to purchase the right type of property inspection. Check your contract to ensure you don’t pay for a maintenance inspection when you’re only entitled to a structural inspection. If your contract uses the standard REIWA annexure then ensure the building inspector understands that the report is to be completed in accordance with the relevant Australian Standard (AS4349).
And the same goes with timber pest inspections. Your contract should make it clear if you’re entitled to complete a timber pest inspection that checks for timber pests including termites, timber borers, and fungal decay, or a simple inspection for termites only. If it doesn’t, we recommend you obtain a timber pest inspection report.
Step 4 : have a pre-settlement inspection checklist
The pre-settlement inspection is designed to ensure the seller has completed all of their contractual obligations with respect to the contract.
We’ve created a comprehensive guide to completing your pre-settlement inspection. It sets out all of your rights with respect to the inspection including when it can be done, what you can check and who you can take to the inspection.
Step 5 : sign mortgage documents early
If there’s one thing that will delay your settlement it’s not signing your mortgage documents on time. That’s because banks require time from receiving the documents to run their final checks on the paperwork and arrange for the correct funding.
Leave it to the last minute and you’re pretty much guaranteed that your settlement will be delayed!
The key is to start asking your bank or mortgage broker about your mortgage documents as soon as you receive finance approval. You can’t sign your mortgage documents too early but you can definitely sign them too late!
It’s best practice to sign and return your mortgage documents early. We recommend a minimum of 7-14 days prior to settlement.
It’s especially important to sign your mortgage documents early if you plan to be away during the settlement period. Don’t leave without signing them!
And it’s also important to use the same signature on your mortgage documents as you use on your other settlement paperwork. Mismatched signatures can and do delay settlement!
Step 6 : sign and return the transfer of land and other documents to your settlement agent immediately
There are a number of documents that your settlement agent will require prior to settlement taking place. As a minimum these documents will include:
- Client Authorisation form
- Transfer of Land (if your property is settling manually)
- Appointment to Act
- Authority to proceed
In addition to these your settlement agent may require other documents to be signed and returned to them prior to settlement. A failure to return the Client Authorisation form will delay your settlement agent signing the electronic land transfer. Your settlement won’t proceed without it.
Failing to sign and return the Appointment to Act means your settlement agent can’t start work on your behalf.
Settlement delays are amplified around busy settlement periods such as Christmas and Easter. A one day delay early in the process can lead to a delay of several days later, especially when public holidays are involved.
