UPDATED: April 2018. “Lost title deeds” is no longer an issue, now that this is carried out electronically, rather than with the old, paper-based method.

If you are buying or selling real estate in South Australia, the settlement day is the big day when keys change hands and moving can begin.

However, for people new to the housing market, it can be mystifying as to why four to six weeks are needed after the signing of the contracts to reach settlement.

Let me unlock some of the mystery about the process.

What is settlement?

Settlement is the legal process through which property is transferred from one party to another. It is not the process of signing the contract but that of bringing the contract into effect.

Last week, I highlighted some of the many things that happen at settlement: Real Estate Exposed: What your conveyancer does for you at settlement.

However, there are many reasons why some settlements take longer than others and that is what my focus will be today.

Some reasons why property settlements can take a long time

If you look through the list of activity we must work through during the period leading up to settlement, you will appreciate why this can take weeks instead of days.

From making sure contracts are in order, caveats checked, and other documentation is ready, there is also coordination of finalising utilities and ensure all liabilities are accounted for. Relying on third party providers to supply information and meet deadlines is a compounding factor and just part of another day at the office for experienced conveyancers.

But beyond the myriad tasks being carried out, other events might cause delays, such as:

Buyers and sellers: It is not uncommon for vendors or purchasers to ask for an extended settlement period during contract negotiations. This usually relates to needing extra time to arrange finance or complete the sale or settlement of other properties. This extension will come as no surprise because both parties need to agree to the terms at the time of finalising the sale contract.

Errors: Some vendors or purchasers choose to do the conveyancing themselves. There is much complexity to the process and if errors arise it often means extra time will be needed to reach settlement. Assuming you have made the right choice to have a professional conveyancer on your side, it means the other party  may be liable for extra interest, charges and costs that might result for you due to their mistakes.

Bank errors: Many conveyancing delays happen because of documentation mix ups at banks. For example, clerical errors, cheques with wrong information, even lost title deeds, can all cause a delay in settlement. These are the most dramatic because they are usually discovered at the last minute and result in settlement being rescheduled a number of business days later.

Finance: Sometimes, finance that was arranged becomes unavailable or new information leads to different terms being offered. Given that finance needs to be in place ready for transfer at settlement, this can cause delays.

I hope this demystifies the settlement process a little more.

Of course, if you are in South Australia, we look forward to helping you celebrate your settlement day with that reassuring jangling of a new set of keys!

UPDATE: Since publishing this story, we have now created a simple conveyancing explainer video that captures all the key points about settlement durations. You can find it here: How long does settlement take? A quick overview by a conveyancer