Congratulations. If you just purchased a block of land and have settled, then it’s time to celebrate! But don’t too carried too away, because there are still some things you need to do to make sure the build goes to plan.

Read on as we share some tips to make the next stage of post-settlement as straightforward as possible.

On the go? Here’s 30 seconds of take outs:

  • Make sure the settlement letter is sent to your builder to confirm land ownership.
  • Save yourself time and hassle by paying the Build Deposit Invoice before settlement (after you’ve received unconditional finance approval).
  • Check the Notice of Commencement to confirm your building timelines.
  • Each building stage (Slab, Frame, Lock-up, Fixing and Practical Completion) will be invoiced separately.
  • You’ll need to submit a Progress Authority Form and a signed Progress Payment Invoice form to your lender to release the funds required to pay your builder and keep your project going.
  • Don’t forget to hire an Independent Building Inspector to carry out the Practical Completion Inspection.
  • Arrange insurance to come into effect as soon as the builder has handed over the property to you.
  • Call us at Capital Properties at any stage if you’re not sure what needs to happens next. 

Keep reading >>

House and Land Process Post Settlement Steps

  1. Settlement Letter.

Once your property settlement takes place, you’ll be issued a settlement letter from your conveyancer. This is an official letter written on the conveyancer’s letter head that simply states your lot number and the settlement date to confirm that land settlement has taken place. That letter must then be supplied to your builder. The builder won’t commence work until they have received confirmation that the land ownership has been transferred to you.

  1. Building Approval (BA) and Pre-Start.

If your financial situation allows, it’s always good practice to pay the Build Deposit Invoice before settlement and after you’ve received unconditional finance approval. It can really speed up the building approval process and allow the builder to begin preparing their pre-start items. The prestart is the first-time many owners get to visualise how their new home will look. This pre-construction phase will cover everything from floor plans to flooring, paint colours and more:

Pre-Start Construction Items:

  • Soil Tests
  • Working Drawings
  • Engineering Application
  • Seek Covenant Approval
  • Lodging Building Application
  • Lodging Plumbing Application
  • Lodging Water Utility Application
  • Lodging Development Application
  1. Notice of Commencement or the ‘Site Start Date’.

As soon as all the relevant approvals have been received the builder can then go ahead and issue a site start date letter called the ‘Notice of commencement’. The Notice of Commencement confirms:

  • The date that works commenced on site
  • The timelines for the build
  • The estimated date for practical completion
  1. Slab Stage.

A builder will usually send an invoice once they’ve completed a specific stage of the build. For example, once your slab has been poured, the builder will issue the slab invoice with some supporting photos. Here’s what you need to know about paying the invoice and why it’s important to get it sorted asap:

Investor / Homeowner Tip – Funds to Contribute

It is vital that as soon as the invoice is issued you are well placed to action things quickly, i.e. organise payment as soon as possible. In some cases, your bank will take all the funds required at land settlement, but some banks won’t. Therefore, you may still have funds to contribute towards the property, depending on how much you put towards the land settlement originally.

Banks Progress Authority Form

If you have already contributed all of the funds the bank requires, the bank will need to pay the invoice. That means that the funds will come from your loan amount. In order for the bank to release the money required to pay the invoice, they’ll need you to complete a Progress Authority Form. You’ll find this with your mortgage documents. If for any reason, you can’t locate the form, then quickly request a copy from your lender or friendly mortgage broker, so that you can supply the Progress Authority Form along with the signed and dated Progress Payment Invoice form you’ll have received from your builder. The bank will not release any funds without these documents, so our pro-tip is to get out ahead and plan for this before any delays occur.

  1. Valuation Inspections 

There’s just one final hurdle to cross before the bank can release funds to pay your builder. And that’s the valuation inspection. At each stage of the construction the bank will need to send a valuer out to site to verify that the invoiced stage correlates to the work completed on site. So even after you’ve submitted the signed progress authority form with the stage invoice, there can be a small delay until the payment is made by the bank.

  1. Slab Stage Receipt 

Once your builder has received the funds, they’ll issue a receipt which the bank will need in order to reconcile all funds paid during the construction. Each of the following stages follow the same process as above. For example;

  1. Frame Stage. 

Follow the same process as above in suppling your lender with the signed progress authority form and frame stage invoice.

  1. Lock Up Stage.

Again, supply the signed progress authority form and lock-up stage invoice to your lender.

  1. Fixing Stage.

Once more, you’ll need to follow the same process as before and remember that you’re obligated to supply the signed progress authority form and fixing stage invoice to your lender.

  1. Practical Completion Inspection (PCI).

You’re getting so close now, but this is no time to get complacent. At this stage, your Building Supervisor will notify you that you’re nearing practical completion. At PCI you’ll need to make sure that you’ve thoroughly checked the work has been completed without any defects, other than a few minor defects or minor omissions that won’t unreasonably affect occupation. We’ve discussed the importance of this stage before and explained why you ought to engage an Independent Building Inspector.

  1. Independent Building Inspector.

The Independent Building Inspector will walk through your home and collate a list of defects or what is required to be fixed before you can reasonably be expected to move in. Your Building Inspector should email a full detailed report to you within 24 hours of the inspection and the builder will suggest a date and time for the handover once items are rectified (usually the builder has 14 days from the first inspection date to rectify defects).

Once confirmation is received, that defects are completed. It is apt that the final invoice be signed, and this with the progress authority be issued to the bank for release of the final payment. By this time, you would have also received your certificate of occupancy (Keep a copy for your records). Again, the timelines for payment are important, so make sure you’re all set to have that final invoice paid within the timing specified on the invoice due date.

Investor versus Home-Owner #Tip Final Invoice and Property Management Notification

If you’re working with a Property Manager, make sure your builder has your Property Manager’s details for the purpose of keeping everyone in the loop/confirmation of your final payment.

  1. Final Valuation Inspection

Once the Final Invoice is received and processed with your lender the last check is to send the valuer out to do an inspection for the bank to verify the house has been completed in accordance with the building contract.

#Special Note This can take longer than a week in some cases. 

  1. Building Insurance 

Before your bank can release the funds required for the final payment, they’ll need to verify that you hold a certificate of currency for the building insurance. During construction, the builder holds the insurance, so once the finance payment has been made the legal ownership of the site transitions from the builder to you, the owner. That means that as soon as handover is completed, the builder will no longer have your property insured and the property will be deemed your responsibility.  So please ensure you have suitable insurance in place to cover your property against damages or loss. 

  1. Handover

Now all you or your Property Manager must do, is to meet with a representative of the building company (Typically the site supervisor) and arrange the Handover Inspection, this is for the verification that all of the works have been completed. The builder’s representative will provide a Handover pack to you or your Property Manager.

#Special Note. If the final payment has not been made, the builder will not arrange the Handover inspection and will retain the keys in their possession until the final payment has been received.

Now, all you have to do is move in, or get your Property Agent to find you an awesome tenant! But if you’re reading this and are thinking that you’re still not sure where to start, just remember that you don’t have to do this alone.

This is what we do at Capital Properties, day in and day out. I mean, we literally wrote the book on property investing. It’s our mission to help people like you, in particular Defence Force members, benefit from our knowledge and climb that property ladder to ensure a great future. So let us help you tackle the tricky stuff.  Call us now to see how we can help you or book in for our popular (and free) Capital Properties discovery session. If you want to know what it’s like to work with us, this blog post gives you a pretty good summary. While you’re here, why don’t you check out some of our free investor tools: Online property investment toolkit | Book Your Pinnacle Program Review | Property Investor – Self Evaluation Tool