BY REMY FORSTER
When it comes to selling or buying property, the settlement date is what everyone looks forward to. Sellers get to pay out their mortgage, dream of what they will spend their extra money on and the excitement of what they will be moving onto next, and buyers get to move into their dream property, or begin a new investment opportunity that will hopefully do well for them in the future.
It’s pretty standard practice when you’re buying or selling a residential property that the settlement date will be along the lines of “on or before 30 days from the contract date.” In Queensland, this is the most standard thing to see on a contract mostly because 30 day settlements have become the norm – but 30 days is not always enough time for the Seller and Buyer to be ready to settle, and it is important to know when you are signing a contract if you are in the position to need a longer settlement period than most.
As a Seller, there are a few main reasons that you may need a longer settlement than 30 days:
1. If the mortgage on the house you are selling is linked to a business loan or other property loans, some lenders require a full 20 business days to be ready for settlement. This is definitely not most lenders, but it is best for you to check with your lender if they will need this long.
2. If you are experiencing financial hardship and have fallen behind on your mortgage repayments, or are in arrears. The process lenders have to go through when you are selling a property in these circumstances is much more complicated than a normal mortgage discharge, and most Sellers in this position end up requiring an extension of the settlement date when they only have 30 days.
3. If you have an original Certificate of Title (a physical title deed) for the property but cannot locate the Title. Original Titles are required for settlement if they exist, and the process for having the Title cancelled can take up to two or three months, and possibly longer depending on how the Title was misplaced.
4. If you need to find another property to purchase, and want them to settle on the same date. You will usually need 30 days from the time you find another property to buy to be able to settle on that property, so unless you find a property immediately you won’t have enough time.
5. If you will be going on holidays either overseas, or to a place where you won’t be contactable (eg. if you are a FIFO worker) for most of the 30 days. There are important documents you have to sign as a Seller that your solicitor will need the originals of, and these are hard to do if you will be overseas or in a regional location.
6. If you are currently engaged in a dispute with a third party who has lodged a caveat on the property. As a Seller, you are required to be able to remove any mortgages, caveats or notices on the title and disputes over caveats can last a very long time.
7. If you are selling the property as personal representative, or on behalf of an estate, due to someone’s passing. When someone passes, their name has to be removed from the title to any property they own before you can have settlement – this process is simple in most cases, but it’s best to check with your estate lawyer how long they need to have this process completed.
Of course, yourself and the Buyer can agree on whichever settlement date is best for the both of you no matter the circumstances! For some, longer settlement periods are preferable so that they don’t have to rush through the 30 day process and some ‘cash’ contracts (where the Buyer is not borrowing any money) can have settlements as short as 14 days. In some cases it may also be easier for you to write a specific date on the contract rather than have a period of time – for example, you may know that you want settlement to happen on 2 June 2016 because you are moving overseas on 9 June 2016.
If you’re unsure about how long you will need for settlement, it is always best to have chat to your solicitor about the circumstances of the sale before you sign a contract to sell so they can assist you in choosing a date.