What happens on settlement day when selling a house in New Zealand?

What Is Settlement Day When Selling a House?
Settlement day is the day the property transaction completes. Ownership transfers to the buyer, the purchase price is paid, and you hand over the keys. It is the culmination of everything that has happened since you first listed the property. Here is exactly what to expect.

What happens on settlement day
Settlement is managed by the lawyers on both sides. On the agreed date, the buyer’s lawyer transfers the purchase funds to your lawyer’s trust account. Your lawyer confirms receipt of funds, discharges your mortgage (paying the outstanding balance directly to your lender), deducts their fees and any commission payable, and transfers the net proceeds to your account. The title is then transferred to the buyer.

As seller, your primary obligation on settlement day is to have vacated the property and handed over the keys. The standard New Zealand sale and purchase agreement requires vacant possession on settlement unless alternative arrangements have been agreed. Keys are typically handed to the buyer’s agent or lawyer once settlement is confirmed.

What you need to do before settlement day
Vacate completely
All your belongings must be removed from the property by the agreed settlement date and time. Buyers who arrive to find personal belongings still in the property have grounds to delay settlement or claim costs. Plan your move carefully, have removalists booked in advance and a clear timeline for the last items to leave.

Leave agreed chattels
Anything listed in the sale and purchase agreement as included must remain. Check the chattels schedule before removing anything from the property in the days before settlement. Disputes at settlement about missing chattels are common and avoidable.

Maintain the property to the agreed standard
You are obligated to maintain the property in the condition it was in when the contract was signed.
Do not remove fittings, make alterations, or damage anything in the period between signing and settlement. Any changes from the property’s contracted condition give the buyer grounds to delay settlement or claim compensation.

The pre-settlement inspection
The buyer conducts a pre-settlement inspection in the days before settlement. This is their opportunity to confirm the property is in the agreed condition, that included chattels are present, and that no damage has occurred since the contract was signed. If they identify issues, these must be resolved before settlement can proceed, either by rectification, or by agreement on a price adjustment.

If settlement doesn’t happen on the agreed day
Settlement failure, where the buyer cannot or does not pay on the agreed settlement date, is stressful but not catastrophic if handled correctly. Your lawyer will issue a notice to complete, giving the buyer a specified period (typically 10 working days) to settle. If they still do not settle, you may be able to cancel the agreement and retain the deposit. Get legal advice immediately if settlement does not proceed as planned.

After settlement
Once settlement is confirmed and funds received, the property is no longer yours. Cancel your home insurance (confirming the buyer’s insurance is in place), update your address with all relevant parties, and retain your settlement statement for tax and record purposes.
​Your net proceeds will appear in your nominated account within hours of settlement completing.

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If you’re asking what happens on settlement day when selling a house in New Zealand, Paul Sumich is a Whangarei-based real estate professional who publishes practical selling guidance for New Zealand home sellers. Find more at paulsumich.co.nz/blog