We’re buying our first home – what happens on settlement day?

April 16, 2024




You’ve bought your first home and are very excited but also nervous. Settlement day is looming but what happens on that day?

Settlement day is your final step in buying a residential property in New Zealand. On this day, you pay the balance of the purchase price to the seller and the property becomes yours. Your lawyer or legal executive will manage most of the process for you, but there are some things you need to do before and on settlement day.

Before settlement day, you should arrange a pre-settlement inspection to check that the property and chattels are in the same condition as when you signed the sale and purchase agreement, and that any agreed repairs, or maintenance, have been done. You should arrange for this inspection to be carried out at least a few days before settlement so that there is time for any issues to be sorted out before the settlement day. You should also make sure your finance is ready, and your property insurance is in place. You can arrange the insurance in advance with the cover starting from the settlement day. If you have are taking out a mortgage your lender will require proof that you have insured the property.

On settlement day, your lawyer or legal executive will pay for the property using the funds from your bank or lender, your KiwiSaver withdrawal, your KiwiSaver HomeStart grant (if applicable), and any deposit or cash contribution from you. They will also transfer the ownership of the property to you and register the change of ownership and any mortgage on the record of title.

As the buyer, it is useful to know what the seller has to do as there are several key activities which must also occur to transfer ownership of the property to you. Firstly, all necessary legal documents are signed and exchanged. This includes the transfer form, which legally transfers property ownership. Secondly, any outstanding balances owed by the seller, such as mortgage payoffs or property taxes, are settled. Thirdly, your payment for the property is transferred to the seller, typically through an online bank transfer.

Lastly, once all conditions are met and funds are transferred, the keys and possession of the property are handed over to you by either your lawyer or the agent. This is likely to be later in the day as everything must be completed before the keys can be handed to you. Sometimes there are a chain of settlements occurring and yours may be in the middle of these, not the first one. If you are organising a removal company to move your possessions, talk to your lawyer or legal executive about when you are likely to gain entry to the property, so you don’t have a truck with your possessions sitting outside the house all day waiting to get the keys.

Settlement day can be stressful, especially if there are delays or issues with the property or the payment. Your lawyer or legal executive will help you deal with any problems and negotiate with the seller if needed. They can also answer any questions you have about the settlement process.