Conveyancing is the process of transferring the ownership of the property you’re purchasing from the seller to you. It makes sure that the process is perfectly legal and above board. The conveyancing process is handled by a conveyancing solicitor or licensed conveyancer.

If you’re looking to buy or sell property, you should not only know what conveyancing is, but understand its importance.

The contract includes the purchase price and date of actual transfer (as agreed upon by both parties) as well as their obligations and responsibilities which if either party cannot fulfil, gives the other the right to take the defaulting party to court so that they can ensure the contract is fulfilled or otherwise claim damages.

In Australia, a licensed conveyancer completes the process of conveyancing. Because of the conveyancing laws and processes, as well as the requirements, searches and costs that vary by state, we advise all buyers to use an expert. The process of conveyancing is by somebody licensed (a conveyancer or a solicitor) can take between 4 to 6 weeks.

What Happens at Settlement?

Settlement is when you take ownership of your new home, receive the keys, and begin the next chapter of your life.

While it is the very last step, it’s an important one. Settlement is a legal process in which the ownership of the property transfers to you.

The key to a successful settlement day is to have your finances in order, and trust that the solicitors or conveyancers – both yours, the vendor’s and the banks – are ready!

Common problems that can delay settlement include missing documents, solicitors failing to attend the meeting and funds not being released on time.

In this period, you should go back to the house to ensure that everything you thought was included in the property remains on site – you want to be sure the property is in the same condition as you when you agreed to buy it.

So, here’s what happens on a successful settlement day:

  • Your solicitor will meet with legal representatives of the owner and your lender.
  • They will finalise funds to purchase the property.
  • The lender then provides the funds for your solicitor to pay for the property.
  • Final financial adjustments, such as an unforeseen utility bill, are agreed to ensure the exact amount owing is paid to the owner.
  • Your solicitor will check with the owner’s representative that their mortgage has been removed from the property title, and there remains no outstanding debt against the property.
  • If all is in order, the property title will be handed to your solicitor, who will then register it with the state government in your name and pay any transfer duties.
  • The property title will be registered against the mortgage by the lender.
  • The keys will be released, and you can move in.
  • The next day, you will likely receive notification from your lender of the transfer of funds for your mortgage and the repayment arrangements.

What happens to your mortgage after you sell your property?

Most Australians who sell their home don’t own their property outright. So, understanding what happens to your loan when you sell is knowledge worth having.

How your mortgage works

When you first took out your home loan, your chosen lender places a mortgage on the property you bought. That mortgage shows up on the property title because, as the lender, they have a legal interest in that property. Holding the mortgage means that, if you don’t meet your repayments and default on the loan, they can pursue legal avenues to recover their money, and that may include selling your property.

If you sell the property while it still has an active mortgage, the lender obviously loses their right to sell it. To protect themselves from this eventuality, you must settle the full amount of your mortgage – called a discharge of mortgage – on the settlement day with the incoming buyer.

Arranging your mortgage discharge before settlement day

The process to discharge a mortgage can take time. Because it can take as long as three weeks, in some circumstances, it’s vital that you take the first steps to arrange your mortgage discharge as soon as you know the settlement date of the property you are selling.

Once you have completed your discharge of mortgage application, your lender will talk to your conveyancer (or solicitor) and make the necessary arrangements to be present at settlement, as required. At that time, any money they’re owed will be received by them and the lender will lodge a discharge of mortgage with the land titles office in your State or Territory. This confirms they no longer hold a financial interest in the property you have sold.

If the amount you owe the lender is not covered by the amount incoming from the sale, you will need to have other funds available to discharge the mortgage, or the property settlement will not go through successfully.

What happens next?

Your conveyancer should fill you in on any outstanding rates and utilities, as well as any fees owed to other relevant parties, such as the real estate agent who sold your property.

If you’re not buying another property immediately, any leftover funds will usually be deposited into your nominated bank account. If you are buying another property and have arranged a simultaneous settlement day, any money owed to you from the sale of your property will be paid directly to the purchase of your new property.

You may then need to make additional funds available towards the purchase price. If those funds are coming from a new mortgage, your chosen lender will then place their own mortgage over the new property. If your State still has paper certificates of title, the bank will hold the certificate of title for the new property you are buying as security for your mortgage.

Dealing with finance issues around property sales and purchases is serious business. With the right team of professionals around you – including a trusted accountant, conveyancer, solicitor and loan broker – you can have the best possible knowledge to help you make informed decisions that properly protect your financial interests.

Have a question about the process? Or want to speak to a member of our team?  We’re here to help. You can get in touch on 07 5375 5856