What To Expect At Settlement For A Rental Property?

Property Conveyancing in Melbourne can be confusing regarding your property purchase or sale settlement or completion. The following guide will break down exactly, what you need to know about the settlement and all of the necessary paperwork you'll need to bring with you to complete the process and get that property in your name!

The Conveyancing Process

It’s important to remember that you are purchasing more than just bricks and mortar when you purchase a property. You agree with another party. A conveyancer will act on your behalf to ensure all parties sign off on everything legally required before ownership of a property can be handed over. The Melbourn real estate conveyancing process can take some time; however, it's worth getting it right! In most cases, settlement occurs within three weeks of signing off on all documents.

What to do when you have Tenants?

When settling on a property, whether buying or selling, it's important to be aware of some of what you can expect at settlement. This includes certain legal requirements surrounding rental properties and some extra considerations when you have tenants already in place. Remember that it's your responsibility to make sure everything is in order – so if you have any questions about conveyancing or anything else, don't hesitate to reach real estate for sale in Australia.

Can you claim the arrears of a tenant while undergoing settlement?

No, the purchaser's liability cannot be inherited. It is preferable to agree beforehand. The conveyancing of the debt can't adjust for the other party because there is no guarantee that the funds are collectible. The settlement process is the legal process of providing an unhindered transfer from the seller to the purchaser. A third party's debts are not the purchaser's responsibility.

If the tenant pays arrears (from before the sale date) after settlement to the buyer, the vendor is entitled to the entire sum. Conversely, the vendor needs to reimburse the buyer if the tenant has paid for rent after the sale date. If there are any other outstanding debts on your property and you're selling it, you need to ensure that these are dealt with appropriately.

Who is liable to receive rent during settlement?

If you're selling a property as a long-term investment, it's best to make sure that your tenant is aware of their right to rent payment on settlement day—this way, you don't have to do any last-minute scrambling or chasing down payments. If you're buying a property with plans to live in it yourself, then be sure to discuss with your real estate agent, how and when rent will be paid throughout settlement (and what happens if there are delays). This information should also be included in your contract of sale.

Acquiring Property with an existing tenant

So, what happens when you're buying a property with existing tenants in it? Do you have to wait until they've vacated before settlement can occur, or can you settle as soon as all conditions are met, and you are clear to take over possession of your new property and rent it out yourself?

The answer is simple: You will be able to settle and take control of your new investment property as soon as all conditions have been satisfied:

● Specify the tenants' lease agreement with the former landlord, either fixed or periodic.

● Meet with the property manager and determine if you will retain or replace them. A property manager can also manage the property if that is your preference.

● Asking and maintenance for the history of rent and clarification of any maintenance work that has been required on the property.

● Periodic rental payments will increase when a tenant is no longer on a fixed lease. Written notice is required.

Completing the Formalities at Settlements

Though the settlement is often regarded as just another day in most people's lives, some major formalities need to be accomplished during settlement. The conveyancer will handle most of these matters on your behalf, but you should be aware of what they are.

For example, if you have rented out your property before selling a property and have signed a lease with a tenant, then you will need to provide evidence of an insurance policy covering property damage and loss. You may also be required to provide evidence that tenants have been informed about their rights and responsibilities under Australian tenancy law.

Conclusion

The moment of settlement for a rental property is an exciting one. It means you're about to become an official landlord, but your rental property is almost ready to be handed over to its new tenant(s). We provide Melbourne real estate conveyancing services as we have years of experience dealing with a variety of cases so that you can get peace of mind and focus on other aspects of owning a rental property.