So You’ve Exchanged Contracts to Purchase a House – What Next?
Decided to buy a house and exchanged all the details? Here's how to make sure your property purchase goes through without a hitch.
Purchasing a property is no doubt an exciting and life-changing experience, but it’s also a fairly complicated process. After you’ve Exchanged Contracts to Purchase a House, there is still a lot to be done to be ready for completion of the sale (known as settlement).
Here we will provide some helpful information on what you need to do to ensure your purchase goes smoothly so that you’ll be living it up in your new home in no time!
1. Confirm the settlement details after you’ve Exchanged Contracts to Purchase a House
Settlement day is the most important part of the conveyancing process, and where everything (finally!) comes together. This is the day when your conveyancer will meet with the vendor’s representatives and all monies and documents will be exchanged. After this date, you will have the title and keys to the property.
Make sure that the date, time and place are locked in and that your conveyancer is set to attend – this is definitely one to write in your calendar.
2. Check the Contract (Again) and Reconvene with your Lawyer
Contracts should be checked, double-checked and triple-checked, especially contracts for the sale of land. Even after you have signed the contract, check it again to make sure every detail is correct for both your personal details and the terms of the sale. Try to do this early on, because if you find anything in the contract that makes you not want to proceed with the sale, you only have 5 days within which to back out of the sale with a minimal financial penalty (this is know as a cooling off period). However, it is also common for sellers to require that the purchaser provide a section 66W which forfeits these rights, and creates a contractually binding relationship between them as soon as the contracts are exchanged. If there is a minor error on the contract, be sure to let your conveyancer know as soon as possible and the contract can probably be amended without affecting the settlement date.
Arrange to have a meeting with your conveyancing lawyer to go over the terms of the contract and what you will need to provide to complete your purchase of the property. After you have checked the contract, have your lawyer review it to make sure everything is iron-clad.
3. Check your Financial Arrangements are in Place
The majority of people who purchase a property finance it through entering into a mortgage with a lender. By this time, you would have ideally figured out how much your loan has to be, who the lender is, the interest rate and your monthly payment amount. Check the terms of your mortgage with the lender and that they will be prepared to give the loan cheque to your representative a couple of days before settlement.
Always check that the terms of the loan are within your financial capacity, as there have been instances where mortgage brokers have provided mortgages to customers which they cannot afford, due to sales incentives provided by the banks.
4. Do a Final Inspection of the Property
A purchaser of a property has the right to inspect it up to 7 days before settlement. This is an opportune time to make one last inspection of the property and ensure that everything you’re paying for, you’re getting. Often, purchasers will wait until the vendor has vacated the property to inspect it to firstly, not disturb the vendor whilst they are still living there, but secondly, and perhaps more importantly, to make sure that no damage was done when the vendor moved out of the property. At this time, check that there are no holes or tears in the walls (from both moving out, and the potential removal of fixtures to the property), that the electricity and water is working, that there are no leaks and that the property is generally at the standard at which you purchased it.
5. Get the Right Insurance
It is important to have the right insurance policies in place before you move into the property. Although you are not residing in the property, liability ordinarily passes from a vendor to a purchaser the day after you’ve Exchanged Contracts to Purchase a House. It is wise to purchase insurance at this stage because it will be difficult to get out of purchasing the property if anything happens to it between the date the contracts are signed and settlement. An insurance lawyer can advise you of what types of insurance you will need, but generally they are:
- House or Building Insurance
- Contents Insurance
- Public Liability Insurance
These three combined will ensure that you have protection if anything goes wrong between the exchange of contracts and settlement.
It can be easy to get caught up in the excitement of purchasing a property after you’ve Exchanged Contracts to Purchase a House, but always ensure that the time after this is spent preparing and reviewing everything for settlement day – as this is the most important part of all.
Jackie is the Content Manager at Lawpath and manages the content team. She has a Law/Arts (Politics) degree from Macquarie University and is an admitted solicitor in the Supreme Court of NSW. She's interested in how technology can help shape the future legal landscape.