Some of the most common questions that we get asked by clients at the start of the process are ‘how long does settlement take?’ and ‘when can we settle?’.
There is no simple answer to these questions, as there is a plethora of factors that affect the settlement timeline.
We know buyers and sellers are eager to settle ASAP. However, allowing a little extra time can be key to ensuring everyone’s expectations are met and settlement happens on the due date.
The Contract
The first factor we look at when considering the timeline to settlement is your specific Contract of Sale.
The settlement period begins from the day the contract of sale is signed by both parties, and the length of the settlement is already indicated in one of the clauses stated in the contract. Because the length is mutually agreed by the seller and the buyer, the time period can be negotiated, and the actual number of days is dependant on the discussion between the two parties.
That said, the typical length of the settlement in New South Wales is 42 days.
Settlement delays
Once the due date of settlement is known, it’s important to understand that there may be times where delays occur. This may result in settlement not taking place on the scheduled due date.
Quite simply, many contracts just do not allow enough time between acceptance and settlement.
Bank delays
Generally, there are two banks involved in a settlement.
- The seller’s bank, for the existing mortgage is known as the discharging bank.
- and the buyer’s bank, for the new finance, is the incoming mortgagee.
The discharging bank usually requires a minimum of ten business days to prepare for settlement.
Where a seller has multiple properties or complex finances, this can blow out to fifteen or twenty business days.
Once the incoming mortgagee has issued finance approval, they then need to prepare mortgage documents. The buyer must sign and return these to the bank before they can settle.
Most lenders require ten to fifteen business days for this process. However, depending on the complexity of the loan, even more time could be needed.
Holidays or absences
Often, buyers or sellers are not readily available to sign the necessary settlement documents.
Most paperwork can be prepared prior to departure, but advance notice will be required by your conveyancer to arrange this.
To avoid holidays or work trips impacting on your settlement, be sure to let your conveyancer know that you’re going away. By notifying them ahead of time the necessary arrangements can be made for you sign the paperwork.
Related settlements
If your buyer is also selling their existing property, you might find that the two settlements need to coincide.
Any delays on the related settlement may in turn cause your settlement to be delayed.
Ideal timing for settlement
Whether you’re buying or selling, we recommend that you always have a chat to your bank or finance broker prior to entering into a contract. They’ll be able to review your financial situation and determine what steps need to be taken for you to buy or sell the property.
Usually, 28 days from the contract date is sufficient for everyone, including the banks to be ready to settle.
Be sure to be proactive during the settlement process:
- Sign and return your paperwork to your conveyancer and bank as soon as possible
- Respond to emails and telephone calls promptly
- Let your conveyancer know immediately of any changes in your circumstances or plans.
