Until you’re party to a property transaction, it’s unlikely you’ll ever have pondered how the settlement process works. If you’re buying or selling your house though, it’s an important concept to understand.

So what is settlement? Essentially, it’s the process of completing the transfer of a property from buyer to seller. Sounds simple, right? Not quite.

Luckily we have two of Martelli McKegg Lawyers’ highly talented property team – Tara Hurley and Louise MacCallaugh – on hand to provide some insights.

The Property Market (TPM): Can you give us a brief overview of what lawyers do as part of the settlement process?

Martelli McKegg Lawyers (MML): The process is anything but simple but, at a high level, your lawyer will do the following on your behalf:

–        Review the LIM report for the property you’re buying.

–        Complete the Sale & Purchase Agreement with your specific conditions.

–        Liaise with your bank to ensure all loan documentation is complete.

–        Liaise with the real estate agent and other party’s lawyer to see the transaction through.

–        Advise you on any issues relating to the property, as identified on the LIM, title or builder’s report, or in the other party’s conditions relating to the sale.

–        Take any action necessary to iron out issues with the property transaction.

TPM: Can you explain some of the terms that buyers and sellers are likely to encounter around settlement?

MML: No problem! Here are some common ones:

Conveyancing: This refers to the legal transfer of ownership of property from one person, business, or trust) to another, completed by your lawyer.

LIM: This stands for ‘Land Information Memorandum’ and is a document provided by the local council. It contains important information about a property’s rates, resource and building consents, drainage, protected trees or buildings and more.

Sale & Purchase Agreement: This is a single document that forms the contract between buyer and seller. It includes things like how much the property will be sold for and any conditions that need to be fulfilled before the sale becomes ‘unconditional’.

Unconditional: This term refers to the point at which all conditions to the Sale & Purchase Agreement have been met. Conditions might include things like buyer finance, review of the LIM and a builder’s report. For auctions, the sale is deemed to be unconditional as soon as there is a winning bid.


TPM: How long does the settlement process typically take?

MML: Generally, from signing the Sale & Purchase Agreement to settlement day, the process will take around four weeks. Of course, in many cases, the date is pushed out to suit the buyer and seller. Buyers (and banks!) are also much more cautious these days, so they will often want to spend a little more time checking the LIM and Builder’s Report before going unconditional.

We recommend that buyers and sellers allow a minimum of 10 working days from ‘going unconditional’ to settlement day – this allows enough time to process all documentation and deal with any bumps in the road along the way, with minimal stress to everyone involved in the transaction.

TPM: What traps should buyers and sellers be aware of in relation to the settlement process?

MML: The issue that typically throws a spanner in the works is timing – specifically, when the conditions are to be satisfied earlier than 10 working days from the date of the agreement, or when the buyer and seller want to settle in fewer than 10 working days. This can cause a number of issues, for example:

Before the Agreement becomes unconditional

–        Getting the LIM and building report, and having enough time to review and query these thoroughly.

–        Arranging finance – sometimes banks want to see builder’s reports or valuations before they will approve your finance

After the Agreement becomes unconditional

–        Getting loan documents signed. Many buyers think their signature on the loan application is sufficient but, in fact, there is a lot more paperwork to sign before the loan can be drawn down.

–        Likewise, if you’re planning to use Kiwi Saver as part of your contribution to the home loan, it usually takes at least 10 working days to get approval from your Kiwi Saver fund.

–        When buying through a company or a trust, if one signatory lives in another city it takes a little longer to get original documents signed.

–        When selling a property that’s part of a body corporate, under the Unit Titles Act 2010, the seller is obliged to provide a statement that clarifies body corporate levies and issues to the buyer within 5 working days before settlement.

Buying or selling your home is – for most of us – the biggest transaction we’ll ever make, so it makes sense to handle the process diligently, without rushing!

TPM: Is there anything else buyers and sellers should bear in mind?

MML: From a practical perspective, neither party should assume that settlement can take place early in the day (i.e. before 12pm). The reason for this is that it takes time to liaise with the bank and one another’s lawyers. If you allow plenty of time on settlement day for the transaction to complete, you (and your movers!) won’t be waiting around for the keys to be handed over.

Another practical consideration for buyers is a pre-settlement inspection. If there has been damage to the property since you first inspected it, you’re in a much better position to resolve any issues before the property settles.

The most important thing is to keep your lawyer informed every step of the way – that way they can ensure there’ll be no nasty surprises and make the whole experience much less stressful.

About The Property Market

The Property Market is a full service real estate agency built to deliver a better experience for buyers and sellers. Think real estate, only reinvented.

  • Our real estate agents operate within a 20 minute radius of Freemans Bay.
  • Our real estate agent commission rates are innovative and competitive.
  • Our focus on customer service is second-to-none.

Check out our latest listings and, if you’re thinking of selling your house, give us a call.

About Martelli McKegg Lawyers

Martelli McKegg Lawyers provides legal advice to help you achieve your personal and business objectives.

Our approachable Auckland-based lawyers deliver prompt and practical advice, at competitive rates and in plain language. We provide tailored solutions to your legal problems.  We help clients throughout New Zealand ranging from private individuals and small business owners to some of Australasia’s largest commercial entities.  Learn more at www.martellimckegg.co.nz

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