What happens at settlement?

Settlement is an event that happens at the end of the contract to give effect to the major term of the contract, which is the transfer of title in exchange of money. In the traditional paper settlement, the seller’s conveyancer would bring all of their title and signed transfer documents for the buyer’s conveyancer to inspect, if the buyer’s conveyancer is satisfied with the documents then they would give the seller’s conveyancer the bank cheques that they have asked for prior to that date.

If the seller has a mortgage on the property that is to be discharged at settlement, then their mortgagee’s representative would also be present to handover the discharge documents. If the buyer has an incoming lender that they’re getting finance from, then their representative would also be present to deliver the bank cheques requested. Only when all the parties to a transaction are satisfied with the documents and money on the table will they confirm that settlement has occurred.

If any one of the parties are not satisfied, then settlement will fail, and the parties will have to try again at a later point once the issue has been rectified. Settlement delays can be costly and impactful because parties will often have made plans surrounding the occurrence of settlement on the appointed date. Beyond that, the party that fails to complete settlement on time may also be up for penalty charged by the other party. Hence, it is important that you engage a conveyancing lawyer that can ensure a timely settlement.