What Is Settlement?
Settlement is the final step in the transaction of property when legal title of the property is transferred from the seller to the buyer. The buyer pays the remaining purchase price on settlement day, the seller transfers legal title, and both complete the financial and legal details of the contract of sale.
Settlement is not as easy as handing over keys - it is a collaborative activity involving conveyancers or solicitors, banks, and property agents to verify that all documents are correct, funds are transferred safely, and the title is properly lodged with Land Use Victoria.
So, How Long Does Settlement Take?
In Victoria, the standard settlement period is typically 30, 60 or 90 days - but it's not fixed by legislation. The period is agreed and determined by seller and buyer when they sign the contract of sale. It can be shorter or longer as both deem fit.
For example, a cash buyer may request an accelerated 30-day settlement, while a seller who is keeping out for his or her next property may seek 90 days to provide some extra time. In some cases, the settlement timeframe could be as few as 14 days or as long as 120 days - although anything beyond what is standard must be negotiated in writing and agreed to by both sides.
Remember that the settlement clock starts running the moment buyer and seller both sign on the contract dotted line - not the day the offer is made or the house is listed for sale.
What Occurs During the Settlement Period?
Even though it may appear as though nothing happens after signing the contract, there is actually quite a lot going on behind the scenes in the settlement period. This is where the conveyancers, solicitors, and lenders do most of the heavy lifting to complete the transfer of ownership.
For the buyer, the timeframe is used to finalize loan approval where finance was conditional, sign a mortgage, pay stamp duty, arrange building and contents insurance, and have the remaining money ready for settlement. Your conveyancer will also perform a number of searches on the property and communicate with the vendor's solicitor to allow any requisitions to be met before settlement day.
For sellers, it's typically a little more straightforward - but no less important. You'll be working with your conveyancer to discharge your mortgage (if applicable), ensure all property disclosures are accurate and complete, respond to any queries raised by the buyer, and prepare for handover. You'll also need to organise removalists and make sure the property is vacated and cleaned in time.
A few days before settlement, the parties will also organise an inspection final - a chance for the buyer to walk through the property and verify that it's in the agreed condition (e.g. no hidden damage or missing items).
What Happens on Settlement Day?
On the date of settlement, both the buyer and seller representatives meet (electronically normally via PEXA, Australia's electronic property settlement facility) to finalize the deal. No physical conclave is required - everything happens online and gets handled between the financial institutions and the legal teams.
The buyer's lender will transfer the balance to the seller's account, title will be amended to show the new owner, and outstanding council rates, water charges, or body corporate charges will be adjusted and paid if necessary.
Once everything is cleared, settlement is done - and only then will the real estate agent hand over the keys to the buyer.
On the seller's part, you tend to receive your proceeds the same day, but at worst it would take a 24-hour period for the money to appear in your bank based on the bank. Upon settlement, the property is officially no longer your legal responsibility.
Can Settlement Be Postponed?
Yes, it happens there are delays - but they're not ideal. Most contracts have specific provisions outlining what happens when one side fails to pay the agreed date.
Delays could be caused by any type of problems, for instance, loan approval issues, missing documents, flawed documents, bank errors, or late discoveries in the last inspection. It is because of this that it is important to have a seasoned conveyancer or solicitor do the task and actually work on fixing potential glitches before they turn into serious problems.
If the delay is due to the buyer, they can be liable to penalty interest for each day settlement is postponed, as provided in the contract. If the seller has caused the delay, the buyer can sue or seek damages.
In some cases, both parties may agree on a short extension if the issue is minor and easily rectifiable.
Can You Modify the Settlement Date?
Modifying the settlement date after signing the contract is not simple - it may be done only if you and the seller agree in writing. You cannot just ask for it to be changed unilaterally, even when unexpected changes in circumstances arise.
This is why it's absolutely important to think very carefully about the settlement period before you sign the contract. Think about how long it will take to put your finances together, pack out your house, or purchase your next home. If you need flexibility, your agent can negotiate the best terms for you on offer stage.
Tips to Ensure a Smooth Settlement
The secret to a problem-free, timely settlement in my experience boils down to preparation, communication, and having the right professionals by your side.
For buyers, having your home loan professionally approved as soon as possible is critical - don't leave it until the last minute. Keep your mortgage broker and conveyancer closely informed and be on time when signing paperwork or handing over ID and financial information.
For vendors, ensure all documentation is in order, check your mortgage can be settled on time, and organize a professional clean of the property prior to final inspection. Try to leave the property one day ahead of settlement to prevent last-minute stress.
As your agent, I work closely with all parties involved - buyers, sellers, conveyancers, and banks - to get everyone singing from the same hymn sheet and informed of key dates and responsibilities. My goal is always to keep everyone calm, focused, and in motion.
Final Thoughts
In Victoria, the standard settlement period is generally 30 to 90 days, although the time might be variable according to your own contract. While the settlement process might appear as a waiting game, a lot of important legal, financial, and logistical activity goes on behind the scenes.
Understanding how the settlement period works - and what your part in it will be - can make the experience much less worrisome and more understandable. Whether buying your first home or selling your family house, having a professional agent and an engaged conveyancer is all that counts.
If you're looking to sell or purchase and want help sorting through the whole timeline and process, I'd be more than happy to take you through it from start to finish. Let's make your property experience as smooth, stress-free, and ultimately successful as possible.