Property settlement is the process of transferring a property from a seller to a buyer, when the conditions for the sale are met.
Unless you are a suitably qualified lawyer, you should use a licensed settlement agent or lawyer.
Settlement date
The date of settlement is set in the contract of sale. The settlement period is usually 30 to 90 days.
Settlement is the date when the buyer:
- pays the balance of the purchase price to the seller
- get the property title and become the registered owner
- takes possession of the property (unless other arrangements have been made).
At settlement, all outgoings such as rates and other charges are adjusted between the buyer and the seller. The seller is responsible for rates up to and including the day of settlement and the buyer is responsible from the day after settlement.
If the buyer, their settlement agent or their lender can't meet the agreed settlement date, the buyer may have to pay penalty fees to the seller.
Using a settlement agent
Your settlement agent is expected to:
- complete and lodge documents to transfer the Certificate of Title
- makes necessary enquiries about title, rates and zoning
- check all inspections and other special contract conditions are completed before settlement
- requests funds to proceed to settlement
- keeps you informed about the progress of buying your
- attend settlement on your behalf.
You are free to choose or change the person conducting your settlement at any time. However, if you do, you may be required to pay some money for the work already done on your behalf.
Choosing a settlement agent
Settlement agents must:
- be licensed to operate in Western Australia
- follow the Code of conduct for settlement agents
- provide you with a written quote (costs disclosure) setting out the maximum amount they will charge, before you sign the appointment to act
- provide you with a Form 1 Appointment to act as Settlement Agent to sign
- provide you with a ‘Form 2 - Disclosure Notice’ if a personal, business or financial relationship exists that may cause a conflict of interest. You must be given this before you sign the Appointment to act.
Settlement agents cannot act for both the buyer and the seller unless both the buyer and the seller give permission on the appointment form.
You should choose a settlement agent or lawyer, who is not also providing services to the other party. If a conflict of interest arises placing one party’s interests above another’s, the agent must withdraw service from all parties.
Choosing a settlement agent fact sheet covers choosing a settlement agent and their roles in a property transaction.
Settlement fees
Settlement agents must disclose their service fees in writing before any agreement. They cannot charge more than the disclosed amount unless:
- there is a significant change in the scope of work
- the client is notified in writing and agrees to continue
- the extra charge is reasonable.
The disclosed fee must not include statutory or other costs such as:
- Transfer duty (formerly ‘stamp duty’) under the Duties Act 2008
- Other taxes, fees, or charges like title search fees through Landgate
- Fees from banks or financial institutions
- Commissions from real estate agents, developers, or other third parties
It a good business practice to provide clients with details of these statutory costs. They are not required to be included in the maximum amount.
Scams
Buyers, sellers and agents need to be aware of criminals masquerading as owners.
To avoid devastating loss it is a legal requirement for settlement agents to conduct their own ID checks. This includes on owners of property or people acting on their behalf and not just rely on a real estate agent’s referral.
For more information and for guidance notes see Property scams.