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Top Tips For Avoiding Settlement Delays

There is very little about a property purchase that is straightforward. Settlement is a particularly stressful time for new homeowners as they wait with fingers crossed for everything to go through smoothly. The stressful periods can be made all the worse by the frequent need to jump through hoops to deliver additional information and paperwork to someone, somewhere.

There is a feeling of urgency and panic around the settlement that can get out of hand, especially if you are not someone who goes through buying properties regularly (which to be honest, is most people).

Settlement is a complex process and if you are confused, that’s because it can be quite confusing. Your conveyancer will know the process requirements and how to connect all the moving parts, blindfolded, so trust them to help you through and don’t be shy about asking questions. A really great way to tell if your conveyancer is experienced and offers valuable services is to ask them to help you explain the settlement process. A great conveyancer will be able to put it into words simply and make it very clear what is required and how the system works.

Knowing what is required and how settlement works is really important for avoiding delays. Small, and seemingly insignificant problems can be responsible for major hiccups, so it’s really essential that everything goes well.

To help you understand where the common traps are that cause settlement delays, we’re listing them here so you can make a point of avoiding these problems and staying on track.

Common Property Settlement Delays

Late Signatures

Both parties need to sign and return the paperwork. There are tight timeframes that this needs to occur in and the conveyancer for each side (buying and selling) will be responsible for organising these and getting them back on time. If you have a great conveyancer they will be able to secure your signatures and process them quickly.

Unfortunately, there is very little you can do to control the other party and get them on schedule. There are delay fines as a penalty in order to help keep everyone on track, you can ask your conveyancer about the process for what happens if the other party is slow to respond.

Bank Issues

Financial issues with banks are a frequent issue for settlement delays. This doesn’t necessarily have to be around finances, although it can be, especially if your loan was not pre-approved, it can also be just a paperwork hiccup.

Both the buyer and seller need to sign and return documents by a deadline. If the paperwork is not completed in full, completed with errors or not returned on time it can cause settlement delays.

Usually, banks will provide a detailed checklist of everything that needs to be covered. Just make sure you read all the details carefully, especially things like finding the right witnesses.

There can be a huge number of complexities involved here, especially if the financing wasn’t finalised (or even looked at) prior to signing the contract, or if the payment is dependent on the sale of an additional property (subject sales, more on this below). There can also be problems if the bank disagrees with the property value that may re-start negotiations on price.

The best way to avoid this is to have your bank paperwork back as soon as possible so it can be thoroughly checked over and ready to go well before the deadline. 

The best advice I can give you here is, to never make assumptions about loans and payments going through, even if you have had a loan approval on a previous property, the terms and conditions might have changed since your last purchase, or they might be different for this particular property set up.

You need to research ahead of time, fill in as much of the paperwork and get the approvals you need before you even start looking at properties for purchase and take the time to go over everything carefully and well ahead of deadlines.

I’d also say the same things for concessions on stamp duty for first homeowners. Don’t assume you qualify, go over the paperwork and fill in as much of it as you can to know for sure what your payment obligations are at the end of the day.

Subject sale delays

As mentioned as complexity to banking, subject sales can really make for a stressful settlement. If you need to sell a current property to pay for your new one (either your live-in-home or an investment property), it has the potential to really put a spanner in the works. If for any reason there is a delay in that sale, it will create a domino effect that will impact your new property settlement as well and could lead to a big loss of money.

Simultaneous purchases and sales need to have linked contracts to settle them together and prevent any dominos from toppling.

What I’d say to do here is talk to your conveyancer as soon as you know you are looking to buy/sell and ask about what they can do to make this as smooth as possible and get the timing in sync. Conveyancers work with subject sales all the time so they know what to do to make this work. In order for that to happen, they need to be forewarned so that the right conditions can be added to the new property contract, you can negotiate settlement times that will be realistic and achievable and have everything in place for a well-timed settlement.

Being interstate, or overseas

If you are not buying locally or you are travelling during settlement it can add an extra layer of complexity to signing and lodging documents. The conveyancer overseeing the settlement stages must be licensed in the state the property is located, which in reality will have them located close by the property itself, which might not be where you are.  Be really upfront about where you will be located, how and when you are contactable and what to do to get around tricky travel.

Ideally, you’ll want to travel to the property and sign your contracts after looking through them in person. If so, meet with your conveyancer and arrange to sign everything needed then and there to get you up to speed. E-conveyancing will make this process a lot simpler but be sure to let your conveyancer know straight away what your arrangements are so you can design a strategy of how to work around limited access and get everything you need well in advance.

Property condition deterioration

A lot of people don’t realise they are entitled to a pre-settlement inspection in the last few days of the property settlement timeframe. This gives you a final look through to make sure everything is as expected in the week before a settlement is finalised. You can see if the current owner has fully moved out and makes sure there has been no damage by vandals, storms or fire. The property should be in the same condition as when you signed the contract (with normal wear and tear accounted for). If there are significant issues then you will want to delay the settlement until these can be agreed on or rectified. While delaying settlement isn’t ideal, if you don’t complete this inspection and highlight problems, then you automatically inherit the property problems when settlement is finalised.

Easy Ways To Avoid Settlement Delays

  1. Choose the right conveyancer

The moment you engage a qualified and experienced conveyancer, things get so much easier. A quality conveyancer knows the settlement process inside out, is familiar with the systems (especially the online e-conveyancing systems) and can give you the advice you need to stay on track. When you hire your conveyancer before you sign the sale contract you get the opportunity to negotiate the terms and conditions that will make the property work for you.

  1. Research (then research some more)

Avoid making assumptions about what you get and what is on offer, from the sale contract itself through to bank loans and stamp duty concessions. Do thorough research well before you sign on to see any hills or mountains that may delay your settlement or even cancel the sale.

  1. Tell the truth

If you have previous financial issues or if there are circumstances that make your case more complex, share. You need to let your conveyancer know about anything that could affect your property purchase so they can give you the right advice and put strategies in place to help you achieve your property ownership goal.

If you have no idea what’s going on or what you should be doing, ask them for help and clarification. Knowing where you stand and what the next step in the process is important for avoiding settlement delays.

  1. Be proactive

Don’t wait for deadlines to come up to motivate you to sign forms and fill in paperwork. Even though it is overwhelming, get started as soon as the paperwork is in your hands. That way to have more time to organise those time-consuming tasks, allow third parties to get back to you and ask questions about things that are more complex. Returning your paperwork early also gives the settlement parties time to read everything over and check for errors that might mean delays to your settlement.

If there are any issues that delay settlement for any items at your end (bank, paperwork etc) the property owner can choose to extend the settlement time (usually for a fee) or cancel the sale. If they cancel, you not only lose your ideal property but also the deposit you paid as well.

Getting settlement right is possible with the right help and some proactive steps at your end.

As a border town business, Peta Stewart Property Conveyancers has conveyancing licenses for both NSW and Victoria and specialise in rural property transfers. If you already live and own property in rural NSW or Eastern Victoria or are looking for a tree change for work or family, we can help make your property dreams come true.

To understand property settlement and what is involved, give one of our friendly team members a call to find out more.