What happens on your settlement date

Settlement date is one of the most exciting days of a first-home buyer’s life. Second only, on the property front, to the day of signing the sale and purchase agreement. Today’s the day the property becomes yours officially, you collect the keys and become a home owner.

But what happens on the day of a first home settlement? Quite a lot, says property lawyer Albert Vaka of Smith and Partners Lawyers.

When does the purchase go through?

Four main things happen on settlement day, says Vaka:

• The money changes hands. Your deposit would have been paid to the real estate agent when you signed the sale and purchase agreement. On settlement day, your bank or lender pays over the mortgage funds into your solicitor’s trust account. The money is then transferred to the vendor’s solicitors on the same day along with any additional cash contributions from you, says Vaka. Cash contributions cover shortfalls between the deposit and mortgage. That money is needed to clear in your solicitor’s trust account on or before settlement day.

• Any KiwiSaver withdrawal and HomeStart grant that wasn’t paid as a deposit will also be transferred from your solicitor’s trust account to the vendor’s solicitors on settlement day.

• The vendor moves out of the property and ensures that their belongings and rubbish are removed. Vendors must do any cleaning or other tasks listed in sale and purchase agreements. That’s what your pre-settlement inspection should cover off, says Vaka.

• Once the vendor’s lawyer receives the payment of the purchase price, they release instruments electronically to your lawyer who then submits them online with Toitū Te Whenua Land Information New Zealand (LINZ) to register the transfer of the title of the property into your name and any mortgage.

After all those steps have been taken, then settlement is complete. The mechanical process of moving in after settlement might take longer based on what the Covid-19 alert level is in the area that you're moving to, but legally the house is yours once settlement has finished.

What happens on handover?

One question buyers often ask is who arranges collecting your keys? Once the purchase price has been paid over, the vendor’s solicitor informs the real estate agent that you have completed settlement and the keys can be released. Your solicitor will call you to let you know, says Vaka.

The settlement process could well be slow and painful for you as a buyer. It’s a busy day for the lawyers who deal with quite a bit of detail. Try to take the day off work just in case you’re needed by your lawyer or bank at short notice.

You’ll be sitting around waiting a bit. It’s a good idea to use that time to tell all those organisations that mail you, your new address, and to also make sure that you keep your moving company appraised of any changes in the timeline.

You should change the address of your contents insurance and double-check that the insurance on your new home is all sorted. Having insurance is a condition of getting a mortgage, so will have been sorted before now.

You might want to double-check that everything is paid and your cover is in place when buying a house.

You should have been thinking already about utilities and other connections such as the Internet. If you haven’t, you’ll need to get them sorted quickly.

Make sure you do meter readings as soon as you get to the home. Take dated photographs of the readings.

When do you do your pre-settlement inspection?

When viewing an open home, you don’t always notice everything important. Your pre-settlement inspection should have taken place two days before settlement day. If you found something wrong at that pre-settlement inspection, it should have been fixed by now or some of the purchase price held back by your lawyer.

Even though you’ve had that final inspection a couple of days earlier, it’s worth looking for anything that may have changed since. If it has, tell your lawyer, says Vaka.

It’s common to move your belongings in on settlement day. But you can’t do this until the legal process is over and you collect the keys. The settlement often doesn’t go through until 4pm. It’s less stressful if when you’re booking a moving company to book for the next day to remove the time pressure, says Vaka.

Now that the ink has dried on your settlement documents and you're all moved in, let our first home buyers hub help you with the next steps. Check out some tips that we have on what to buy for your first home so that it's all ready for the big day.