Real Estate Investment Information - The FAQ's You'll Have About The Settlement Process!

Real estate investment information about what happens, who does what, terminilogy used, who pays right through to 'cooling off' periods and when do I actually settle can be confusing even to the initiated.

The process of settlement of a significant purchase can be anxious as it can be nerve racking especially for new buyers. There can be such a lot of formality(it would seem to many)to get through and all you want as a buyer is to know, 'when do I get the keys.'

Conversely all the seller wants is their money!

Not forgetting that as you accumulate more real estate investment information about the settlement process, the more you'll understand and the less stress you'll put yourself through at this exciting time.

And it's not just about less stress. Some of the real estate investment information that your about to read can literally save your skin in either financial terms or convenience of title for a better annalogy.

Easments, covenants and certificates for example can be an extremely limiting factor on the property you wanted to redevelope or attempt to block public access to for example.

Other real estate investment information that might just save your bacon is that of, 'What do I have to do when it comes to insurance when you sign a contract?'

Or... that other little known piece of real estate investment information in respect of 'Cooling Off' periods has caught more than one purchaser out in the past. So much so that the legislation to cooling off periods has changed in most states of Australia.

Special Note: Their is no cooling off period for property bought at auction

The essence of knowing as much real estate investment information as you can simply puts you in a position of more control and less stress so here’s 18 of the most asked questions off the bat for you.

Your real estate investment information resource of 18 of the most frequently asked questions about the whole process

1. What is a “Section 32 Statement”? (also known as a “Vendor’s Statement”)

2. Why is a title search done?

3. What happens with the keys?

4. What time frame is involved?

5. Who pays the rates?

6. Do you have to attend?

7. Where does the process take place?

8. What is vacant possession?

9. What is a covenant?

10. What is an easement?

11. What are “certificates”?

12. What do I have to do when it comes to insurance?

13. What is the best way to pay the required settlement monies?

14. When should you do the final inspection?

15. When can the property be occupied?

16. Who notifies the sale to the Gas and Electricity companies, Council, etc?

17. What is "Cooling Off"?

18. What do I do if my finance is not approved?

Your real estate investment information FAQ’s in detail.

1. What is a “Section 32 Statement”? (also known as a “Vendor’s Statement”) Under the Sale of Land Act 1962, a disclosure document known as a “vendor’s statement” or “section 32 statement” must be given to a purchaser before a contract is signed. The is a disclosure statement given and required under the Sale of Land Act 1962 and contains certain information about the property being sold. Information regarding the location of easements, particulars of building approvals given in the last seven years, and details of rates and charges that affect the property are just a few of the things that must be disclosed in this Section 32 statement.

2. Why is a title search done? When you purchase a property, you need to know the that seller is in fact the registered proprietor of the property, or otherwise have the authority to sell the property. A title search provides the basis for this information. This is applied conversely when you are selling a property. A title search will also give details of particulars and of any covenant, registered easements, and other registered encumbrances.

3. What happens with the keys? The estate agent, should provide the keys on the day of hand over, prior to the appointed time. If no agent is involved, the keys would normally be provided by the conveyancing company to be handed over at the said time.

4. What time frame is involved? Generally your time of total new ownership takes place at a time that is discussed and proves convenient to all parties. This normally includes the purchaser’s conveyancer and Bank/Lender and the seller’s conveyancer and Bank/Lender.

5. Who pays the rates? Relevant charges including the land and water rates are usually adjusted at settlement to ensure that you are only liable for the pro-rata rates for the period that you have owned the property.

6. Do you have to attend? This is normally attended by each party’s conveyancer or solicitor on your respective behalves.

7. Where does the process take place? The usual course of action is that settlement follows the Title. This means that it'll take place where the seller's Title is located. This is usually at the seller’s bank or lending institution. This means that you need to ensure that any cheques required for a purchase settlement arrive in time so that they can be forwarded to a agent. If the seller does not have a mortgage, settlement normally takes place at the office of the seller’s conveyancer.

8. What is vacant possession? A purchaser is normally entitled to vacant possession of the property at settlement. This means that the seller/tenant will need to be out of the property along with all personal items prior to the appointed time. (You may of course buy a property with a tenant already)

9. What is a covenant? Now here's a little piece of real estate investment information that you will want to know as a developer.

You’ll often find covenants registered on Titles and they usually require that the land is to be used in a certain way. A covenant for example may require any dwelling to be built in brick or other suitable building materials, or it might prohibit more than a single dwelling on the property.

10. What is an easement? An easement is an area of land on a property that is set aside for purposes such as drainage or sewerage mains. Obviously these cannot be built over or on without the approval of the appropriate authority.

11. What are “certificates”? The are various certificates that a buyer must be aware of and are supplied by the seller and obtained from various statutory authorities, such as the local council, water board, State Revenue Office, (State) Roads, and Department of Infrastructure.

The certificates will reveal normality’s or abnormalities of services or special conditions. For example, a certificate from the local water authority may reveal the location of a sewer main if it transverses the property. Sometimes underground piping or cables are not laid within a registered easement. Naturally this information is vital to a purchaser, especially if the purchaser proposes to carry out renovations work or extensions on the property.

Other certificates are used to ensure that rates and charges on the property are properly adjusted at settlement. Any arrears would be dealt with to ensure that a purchaser does not become liable for the seller’s debts on the property.

12. What do I have to do when it comes to insurance? When you sign a contract of any sort for the purchase of a property, you obtain an “insurable interest” in the property. Naturally and wisely you should protect this interest. The seller of a property has obligations to provide the property to you as inspected however; there may be situations where you could be forced to accept a property that has been damaged where that damage may be claimed for under an insurance policy.

Unfortunately you do not know and should never trust the insurance status of a seller. A lender requires the purchaser to arrange insurance cover, noting the lenders full name as “an interested party” or “as mortgagee”. Failure to provide a certificate from the insurer noting this can lead to a delay in settlement.

13. What is the best way to pay the required settlement monies? You are required to pay various amounts of money during settlement. Due to the size of funds required for property settlement, cash is generally not suitable. Personal, credit union or building society cheques are also not acceptable therefore you should arrange for suitable bank cheques for settlement.

The seller of the property usually provides details of the cheques required for settlement. Your conveyancer will make arrangements with the seller’s conveyancer for those cheque details.

14. When should you do the final inspection? Normally within seven days prior to the settlement date. This is normally arranged through the selling agent or secondly your conveyance company.

15. When can the property be occupied? A purchaser can usually plan to have the property occupied as soon as the settlement has taken place and the keys are collected from the selling agent.

16. Who notifies the sale to the Gas and Electricity companies, and Council, etc? Your conveyancing company will notify the local Council and Water Board of the change in ownership. You should contact Telephone service providers, Gas company, and Electricity prior to settlement to arrange for the services to be read and invoiced to the seller and new accounts issue to you.

17. What is "Cooling Off"? A purchaser of residential property may be entitled to bring a contract to an end by written notice, without any specific reason being needed before contracts are signed and exchanged. This "cooling-off period" varies in length depending on the state in which the property was bought. There are certain situations where this cannot occur.

For example, the purchaser cannot bring a contract to an end if -The purchase price is over a stipulated price governed by the state;

1. Independent legal advice from a solicitor was obtained prior to signing the contract

2. The property was purchased at an auction, or within a governed time period before or after the auction date

3. The property is not a residential property

More real estate investment information about 'Cooling Off' (opens in a new window)

18. What do I do if my finance is not approved? And I guess the most important piece of real estate investment information for most of us to know is...

It is the purchaser’s responsibility to advise if their finance is not approved by the approval date. Therefore call your conveyancing company immediately.

This list is not inclusive and has been compiled by experience. If you would like to know any other specific real estate investment information that you think should be included here please contact me and let me know. I will do my best to find out for you and add it to this list of FAQ's.

Return from Real Estate Investment Information -FAQ's- (this page) to Wealth with property home page