What is property settlement and how long does it take?

You've found your dream home, your offer's been accepted, and now the wait begins. But how long will it be until you get the keys? Or, if you're selling a property, how long until you receive the sale proceeds?

Here's what happens during the settlement period, all you need to know about settlement day, and how to avoid last-minute delays.

What is property settlement?

Property settlement is the period between a buyer's offer being accepted, or an auctioneer's gavel falling on a winning bid, and the moment in which a property's title changes hands. It officially begins when both parties sign a contract of sale.

The settlement period will encompass all the legalities of transferring property titles, back and forth between home buyer and mortgage lender, crucial inspections of the property, and various bits of paperwork.

The buyer usually pays a deposit when the contract is signed. It's held in trust (often in the name of the real estate agent) and released to the seller on settlement day.

How long does property settlement take?

Property settlements typically take between 30 and 90 days, with the usual settlement in NSW being 42 days. The length of a particular transaction's settlement period is detailed in the contract of sale.

Both buyer and seller can negotiate the length of the property settlement and they must come to an agreement before the process can begin. Though, a buyer purchasing at auction likely won't get a say.

Don't take these negotiations lightly - too short a settlement window could leave you pressed for time and facing penalties while too long a window might deter the other party.

It's suggested you reach out to a solicitor or conveyancer before you submit or accept an offer to be sure how long you might need, taking into account the process in your state or territory and your personal situation.

What needs to happen during property settlement?

The settlement period will likely see you busy gathering and submitting paperwork and attending appointments needed to complete the property transaction - that's why it's important to allow enough time.

Below is a breakdown of what buyers and sellers typically need to do during the settlement period:

For buyers	For sellers
Verify and provide identity documents	Verify and provide identity documents
Check and sign the transfer of documents	Check and sign the transfer of documents
Secure unconditional home loan approval (if buying with a mortgage)	Request your lender discharges your mortgage (if applicable)
Organise and conduct a building and pest inspection	Ensure the property is vacant by settlement day (unless otherwise agreed)
Adjust services, body corporate fees, and rates charges (you'll need to compensate the seller for any balances you inherit)	Pay services, body corporate fees, and rates up to or beyond settlement date (you'll be compensated for any overlap)
Conduct a final inspection of the property shortly before settlement day	Ensure the property's condition is as it was during inspections and agreed repairs are completed
Collect the keys and move in	Hand over the keys, as well as any remotes and pin codes needed to access the property

A solicitor or conveyancer can help you tick all the boxes prior to the settlement day and prevent delays.

What happens on settlement day?

Settlement day is the moment everything falls into place.

On this day:

• The seller officially receives the funds from the sale

• Your lender finalises the home loan in the buyer's name (if applicable)

• Legal ownership of the property is transferred to the buyer

Before this, you'll need to ensure:

• A pre-settlement inspection has confirmed the property is in the same condition as in previous visits

• You've secured unconditional home loan approval

• All required documents are with your conveyancer or solicitor

Do I need to attend settlement day?

Good news: You don't need to physically attend the settlement process. In fact, thanks to digital systems, neither buyers, sellers, nor their representatives typically need to present in person.

Previously, settlements were handled at land title offices, but now they're done online. Your solicitor or conveyancer manages everything and will notify you when the transaction is complete.

Should you opt for a long or short settlement period?

Short and long settlement periods each have their pros and cons, and these will vary depending on whether you are buying or selling a property.

For buyers, a shorter settlement period can mean moving in sooner and saving on rent. However, a longer settlement provides more time to organise documents, complete inspections, and secure unconditional loan approval, which may take a few weeks.

For sellers, a shorter settlement period allows for faster access to the sale's proceeds while a longer settlement gives more time to pack, move into a new home, or provide adequate notice to tenants.

In more complex transactions, such as buying an off-the-plan property, a longer settlement period is generally advisable to allow for additional requirements and potential delays.

In some cases, you may be able to extend the settlement timeline if issues arise.

Is property settlement different to home loan settlement?

During the property settlement process, your home loan will also settle. In practical terms, this is when the lender hands over the funds you're borrowing to the seller.

After your lender has handed over the amount you've borrowed to purchase the property, you'll begin the process of paying back those funds according to the home loan terms and conditions you've agreed to.

Typically, your first home loan repayment will be due one month after the property settlement date. However, this will depend on the repayment schedule set down by your lender. If you're unsure, it's wise to confirm the exact date your first repayment is due and make a plan for how you'll pay it.

See also: How fortnightly repayments could help you pay your mortgage off sooner

Tips to make the settlement process smoother

Organising these ahead of time can help you progress through the settlement process with your mind at ease:

• Secure insurance early
  Depending on your location, buyers may be responsible for insurance from the contract date, not the settlement date. Make sure you're covered either way.

• Conduct a title search
  Usually done by your conveyancer, a title search ensures there are no ownership or zoning issues with the property.

• Check your paperwork carefully
  A misspelled name or missing form could delay the entire transaction. Triple-check everything before signing.

• Stay in touch with your conveyancer
  They'll flag key deadlines and help resolve hiccups before they snowball into costly delays.

• Prepare for all costs
  The price tag on a property is far from the only expense facing a homebuyer. Other costs surrounding settlement can include:

  • Stamp duty

  • Conveyancing fees

  • Mortgage registration fee

  • Home loan fees

  • Home insurance

Property settlement complications to look out for

As you can see, property settlements have a lot of moving parts, meaning there can be many hiccups along the way. Here are some of the most common hold-ups to property settlements in Australia:

• Missing or incorrect paperwork

• Delayed loan approvals

• Title issues
  Unresolved issues from previous transactions such as existing unpaid debt, illegal or non-compliant structures, or other caveats or covenants on the property can hold up the process.

See also: What is title insurance and is it worth it?

• Final inspection issues
  Buyers are generally granted a final inspection before property settlement takes place. If there are discrepancies or unresolved issues, it can delay settlement until resolved.

• Seller is not ready to vacate
  The seller may not be out of the property by the agreed date or there may be unresolved disputes with existing tenants.

• Third-party hold-upsIt only takes one conveyancer, real estate agent, or lending officer to be sick, away, or behind on their work to slow the settlement process down.

• Hold-up with other property sales
  If the property sale is dependent on another property settling, any hold-ups in that process can have a flow-on effect to other transactions.

• Poor communication
  Ideally, everyone involved should be clear on what's required and when it's needed for settlement to run smoothly. Alas, this can breakdown in along the communication chain.

Settlement risks when buying off-the-plan properties

Settlement risks are often considered greater for off-the-plan property purchases, as the time between the signing of the contract and the completion of the project can see a borrower in a notably different financial position.

A lender may agree to lend a certain amount to purchase an off-the-plan property initially but, when tools are put down, the newly built property may be worth less than the borrowed amount.

This could mean a borrower is left with a higher loan-to-value ratio (LVR) than expected and may be forced to either top up their deposit or take out lenders mortgage insurance (LMI). In a worst-case scenario, a lender may refuse to hand over the funds for the purchase based on a new valuation of the completed property. This could potentially force the buyer to forfeit the sale.

Failure to settle on an off-the-plan purchase may have other consequences, including the loss of your deposit.

Can you move in on settlement day?

People involved in property settlements day in, day out recommend new homeowners cool their heels a little when it comes to organising their moving date.

They advise home buyers make arrangements to move the day after settlement at earliest. Many removalist companies advise exactly the same thing, so it's worth taking note from the experts.

But, if you must move on settlement day, you could ask the seller:

• if they'd mind bringing settlement forward by one day
• if they're be willing to grant access prior to settlement
• if they'd mind granting access to part of the property - say, the garage - prior to settlement

What to do after settlement

Once settlement is complete, it's time to celebrate. Open a bottle of champagne, do a happy dance, and enjoy knowing you've made it. But before the party gets too lively, there are a few things to take care of:

Insurance

The most important thing to organise after (or before) settlement day is home insurance. It's vital to insure what's likely your most expensive asset.

Many states and territories - including NSW and Victoria - see the buyer take responsibility for insuring their property as soon as settlement is complete and any damages occurring afterwards are their responsibility.

However, Queensland, South Australia, Tasmania, and the ACT see a buyer responsible for the property - and therefore its insurance - shortly after the contract of sale is signed.

Internet, electricity, water, and other services

If you're planning to move into the property you've purchased, you'll likely need to contact service providers to get everything connected.

How easy or challenging this process is will depend on the age of the property and whether it's been vacant for a while. In some cases, it might take a few days to secure services.

Rates and strata levies

While potentially less urgent, it's worth bearing in mind that you're now your home's owner and, thus, are responsible for paying rates and, if applicable, strata fees.

The settlement sheet will usually show the adjustment for local council rates - you would have refunded the seller for any rates they'd paid in advance. That's generally the case for strata fees too.

Property settlement timeline FAQs

What is the standard property settlement period in Australia?

Most property settlement periods in Australia range from 30 to 90 days. In New South Wales, 42 days is the most common timeframe while 60 days is often preferred in other states.

The exact timeframe is typically outlined in the contract of sale.

Can I choose the length of the settlement period?

Yes. The settlement period can be negotiated between the buyer and seller before the contract is signed. Common timeframes include 30, 42, or 60 days, but longer or shorter periods may be agreed upon to suit each party's circumstances.

When does the settlement period start?

The settlement period begins once the contract of sale is signed and dated by both parties. This date is used to calculate the official settlement day.

What happens during the settlement period?

During the settlement period, both the buyer and seller (or their representatives) complete a range of tasks, such as:

• Finalising finance
• Organising inspections
• Adjusting rates and fees
• Preparing legal paperwork
• Arranging for keys, access, and handover

On settlement day:

• The buyer's lender transfers the remaining funds to the seller
• The real estate agent releases the buyer's deposit to the seller
• The title is legally transferred to the buyer
• The keys are handed over

Once complete, the buyer officially owns the property and the seller receives the proceeds.

Can a settlement period be extended?

Yes, the settlement date can be extended, but generally only with mutual agreement between the buyer and seller.

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