When it comes to buying a house, one of the most exciting things you may be looking forward to is getting handed the keys to your new home. On settlement day, you are likely to be waiting in anticipation for that moment to arrive. Perhaps you are working with a moving company on a tight timeframe. In another case, you may be excited to take possession of your new home. If you would like to find out more about the process of getting the keys to your new property, then read on further.
In reality, you only get given the keys to your property once settlement has taken place. Settlement is defined as the point at which the purchase price is paid and the title to a property is transferred. As would be expected, it is quite hard to pinpoint the exact moment at which that will happen on settlement day.
Who determines the outcome?
Ultimately, it comes down to who gives what firstly. The Vendor will not want to hand over the property until they receive payment of the purchase price. On the other side of the coin, the Purchaser does not want to hand over their cash without a confirmation that they will receive the property in return.
How are these issues overcome?
To tackle this tension, the lawyers involved in the property settlement will give each other undertakings. Undertakings are essentially a formal pledge or promise to do something. These can be enforced against a lawyer in court, meaning that everyone involved can be confident in moving forward and playing their part.
What happens in a property settlement context?
The Vendor’s lawyer will give an undertaking that when they receive payment of the purchase price from the Purchaser’s lawyer, they will transfer the title of the property to the Purchaser. The Purchaser’s lawyer will pay the purchase price and given an undertaking to the Vendor’s lawyer that the payment will not be altered, withdrawn, or reversed.
How does this affect what time I get my house keys?
There is a specific order within which things have to happen before the undertakings can be given and settlement can take place.
For example, if the Vendor has a mortgage against the property, the Vendor’s lawyer cannot give an undertaking to transfer the title to the property until the Vendor’s bank confirms how much money needs to be paid for the mortgage over the property to be discharged. This sum will usually not be confirmed until the morning of settlement due to the interest being payable up to the settlement date.
When can the Purchaser’s lawyer pay the purchase price?
There are several factors which must be fulfilled before the Purchaser’s lawyer can pay the purchase price. This includes: that the Vendor’s lawyer has given their undertakings, if the Purchaser is using bank finance, then the bank must have advanced loan funds, the Purchaser’s cash contribution must be put into the lawyer’s trust account.
As this article has shown, there are a number of factors that must be fulfilled before settlement can occur and the new owner can be handed the keys. Rest assured that with patience and a good lawyer, you will be through.
