What is settlement?
The settlement date is the date when the balance of purchase monies is paid to the Vendor and the Purchaser takes possession of the property. The settlement date, or a method to calculate the settlement date, is set out in the Contract of Sale. If the settlement date falls on a weekend or public holiday settlement will be due on the first business day after that date. On the settlement date the Vendor’s and Purchaser’s representatives, together with any incoming and outgoing mortgagees, arrange to meet at a convenient time and location. The purchase monies are handed to the Purchaser’s representative by way of bank cheques and the documents required to transfer the property from the Vendor to the Purchaser are handed to the Purchaser’s representative and then to the Purchaser’s mortgagee (if applicable). Once all parties are satisfied with the cheques and the documentation and good title has been established, settlement is deemed to have been effected. The Vendor and Purchaser and the selling agent are notified that settlement has taken place and the keys can then be released to the purchaser.
What are adjustments?
A Statement of Adjustments is prepared by the Purchaser’s representative to calculate the monies that are owed upon the property. Adjustable items include the council rates, water rates, body corporate fees (if applicable) and the like. Adjustments are calculated so that the Vendor pays for everything due up to the date of settlement and the Purchaser for everything due from the settlement date until the end of the next rating period. In accordance with the Local Government Act adjustments are calculated on a paid basis. Cheques to cover payment of any outstanding rates are deducted from the monies due to the Vendor at settlement. These cheques are retained by the Purchaser’s legal representative and forwarded to the relevant authorities following settlement
What is the Transfer of Land?
The Transfer of Land is a formal legal document which is registered at the Office of Titles after settlement. It establishes the Purchaser as the new owner of the property. The Transfer of Land is signed by the Vendor and the Purchaser. The amount of stamp duty payable is calculated by reference to the Transfer of Land.
What is Title Insurance?
You should consider purchasing title insurance and we will refer you to an insurance company if you wish. The insurance covers various risks such as identity fraud, incorrect building approval certificates, boundary disputes and problems with zoning requirements.
What is state of repair?
The Contract normally provides that a property is sold in the condition it is at the day of sale and so often the Purchaser has no right to object or claim compensation if the Purchaser discovers that a building is defective. Prior to signing you should be able to negotiate a special condition in the Contract to make it subject to a satisfactory building inspection, survey or pest inspection.
What is a finance condition?
Unless you have sufficient funds available to purchase the property you will have to obtain finance and it is therefore very important that a Contract is conditional upon your finance being approved. A finance condition allows you to cancel the Contract if your finance is not approved within a certain time. If you are purchasing at auction you will be required to enter into an unconditional Contract so you should at least ensure that your finance is pre-approved prior to signing.
What is an off-the-plan purchase?
If you purchase a property with a building that is being constructed then stamp duty is calculated on the value of the land only or on the value of the property at the time the Contract is signed rather than on the value of the property and the completed building. In this instance there can be a substantial discount on the stamp duty that is applied to the purchase.
What is a Nomination?
Unless you are certain who the Purchaser of the property is to be then you should ensure that General Condition 18 of your Contract has not been deleted or varied. This will enable you to later on put the property into the name of the correct Purchaser which may be you, and/or someone else or a company.
What is a Fractional Interest holding?
It you are purchasing with another person and you intend to hold the property in unequal shares (for instance if you are going to hold 75% and the other party 25%) it is important that the Contract of Sale reflects the correct holding to avoid additional stamp duty being assessed. You must decide on the manner of holding prior to signing and ensure that it is stipulated in the Contract of Sale.
I have read online about Electronic settlements?
There is an up-coming change to the way we settle properties in Victoria. Whilst still in pilot, this is will be a major change to the way settlements are effected. At present, settlements are done via a meeting between representatives of the Purchaser and Vendor, and incoming and outgoing lenders.
What is VOI and what do I need to do?
The Registrar of Titles requires verification of identity (VOI) from all parties to transfers lodged for registration from the 9th November, 2015. This will involve you producing evidence of your identity to us to enable us to comply with Land Titles Office requirements in a similar way to the “100 points” rule that exists when opening bank accounts. However, the new rules are a little more stringent. The onus is on you, the client in a Conveyancing transaction, to provide this evidence of identity before a transaction can proceed to settlement.
There are a number of VOI providers in Victoria and we have provided links below regarding the options available to you.
Please contact one of the above to arrange verification.
Disclaimer: The information provided on the Knox Legal, incorporating Lane Amazon Conveyancing web site is not intended to be legal advice. Many factors unknown to us may affect the applicability of any statement or comment that we make on the Knox Legal, incorporating Lane Amazon Conveyancing web site to your particular circumstances