Timing settlements

Coordinating the dates to ensure a smooth transition between properties.

Aligning your settlement dates

The ideal scenario for an upgrader is 'simultaneous settlement', where you sell your old home and buy your new one on the same day. This allows the funds from your sale to flow directly into the purchase of your new property. In Victoria, this is managed by your conveyancer or solicitor through an electronic platform called PEXA. While efficient, simultaneous settlements require everything to go perfectly. If there is a delay in the chain, such as your buyer's bank being late, it can cause a domino effect that prevents your purchase from completing on time. This can lead to penalty interest or, in extreme cases, the loss of your deposit.

To reduce risk, many buyers aim for a 'staggered settlement'. This involves settling your sale a day or two before your purchase. This ensures the funds are cleared and ready. However, this creates a gap where you are technically homeless. You will need to arrange for short term accommodation and storage for your belongings. In Victoria, you can negotiate with the seller of your new home for 'early possession' or a 'license to occupy'. This allows you to move your furniture in or even live in the property before settlement, usually for a fee. Conversely, you could ask your buyer for a 'lease back' to stay in your old home for a few days after settlement.

The role of your conveyancer

Your conveyancer is the conductor of your settlement orchestra. They coordinate with the other party's legal representatives and the banks involved. In Victoria, they ensure that all adjustments for council rates, water rates, and land tax are calculated correctly. They also handle the lodgment of documents with Land Use Victoria. It is vital to choose a conveyancer who is experienced in simultaneous settlements and is proactive in communicating with all parties. Provide them with your signed contracts as soon as possible and keep them informed of any changes in your circumstances or expectations regarding the timing.

• Request a 3-day buffer between sale and purchase
• Ask about a 'license to occupy' for the new property
• Ensure all bank documents are signed weeks in advance
• Confirm the time of day for the PEXA settlement
• Have a backup plan for pets and children on moving day

Managing penalties and interest

If you fail to settle on time in Victoria, the standard contract usually allows the seller to charge penalty interest for every day the settlement is delayed. This rate is often set high, typically around 10 percent per annum or as specified in the contract. Additionally, you may be liable for the seller's costs, such as additional legal fees or storage costs they incur. If you are the one selling, you have the same rights against your buyer. Understanding these risks highlights why building a buffer into your timeline is more important than the convenience of a single moving day. Always have a small cash reserve to cover a few days of penalty interest just in case.

Communication with your removalist is also key. If you are doing a simultaneous settlement, you will need to be packed and out of your old home by the time the buyer takes possession, usually by midday. However, you might not get the keys to your new home until mid-afternoon. Removalists in Victoria are used to this 'waiting time' and will often charge an hourly rate while they sit outside your new home. Budget for this potential cost. If possible, choose a removalist who offers overnight storage in their truck, which can simplify a staggered settlement where you move out on Thursday and move in on Friday.

Finally, check the condition of the new property before settlement. In Victoria, you are entitled to one final inspection in the week before settlement. Ensure the property is in the same condition as when you signed the contract and that all 'chattels' (items included in the sale like dishwashers or light fittings) are present and working. If there are issues, inform your conveyancer immediately. While you cannot usually delay settlement for minor issues, your conveyancer may be able to negotiate a 'withholding' of funds to cover repairs. This protects your interests and ensures you are not moving into a home with unexpected problems.