Contracts, conditions and settlement
Navigating the legal paperwork and the final stages of the transaction.
Work outwards from the structure. Cosmetic issues are the cheapest to fix.
Understanding your cooling-off rights
In Victoria, buyers generally have a 'cooling-off' period of three clear business days after signing a contract for a private sale. During this time, you can change your mind and withdraw from the sale. If you do, the seller is entitled to keep a small portion of the deposit, usually 100 dollars or 0.2 percent of the purchase price, whichever is greater. It is crucial to note that cooling-off rights do not apply if you buy at an auction, or within three business days before or after a scheduled auction. They also do not apply to commercial properties or properties over 20 hectares used for farming. Always clarify your specific rights with your conveyancer before signing any documents.
For upgraders, the cooling-off period is a time for final reflection but should not be used as a substitute for proper due diligence. Use this time to double-check your finance approval and review the building inspection report one last time. If you find a major issue during these three days, you have a relatively inexpensive 'out'. However, for the seller, this is a period of uncertainty. If you are the seller, you want to see that the buyer is committed and that their deposit has been paid into your agent's trust account. Once the cooling-off period expires, the contract becomes much harder to break without significant financial consequences.
Common contract conditions for upgraders
Aside from 'subject to finance' and 'subject to building and pest', upgraders often deal with more complex conditions. We have discussed 'subject to sale', but you might also see 'subject to registration of plan' if you are buying a newly subdivided piece of land. Another common condition is 'subject to repairs', where the seller agrees to fix specific items before settlement. Ensure these conditions are drafted clearly by a legal professional. Vague wording like 'fix the fence' can lead to disputes; instead, use 'replace the north-facing fence with new 1.8-metre timber palings'. Precision in your contract protects you from disappointment on moving day.
- Confirm the cooling-off period expiry date
- Verify the exact deposit amount and payment method
- Check all 'chattels' are listed in the contract
- Ensure any special conditions have clear deadlines
- Review the 'default' clauses for both parties
Chattels vs Fixtures
A fixture is something fixed to the house (like a built-in oven), while a chattel is movable (like a fridge). If you want the custom curtains or the designer light fittings, ensure they are explicitly listed as 'included' in the contract.
The settlement day process
Settlement day is when the balance of the purchase price is paid, and the title of the property is transferred to you. As mentioned, this is now largely done electronically via PEXA. Your presence is not required; your conveyancer and the banks handle the digital transfer of funds and documents. You will be notified once settlement has occurred, at which point you can collect the keys from the estate agent. If you are selling and buying on the same day, your conveyancer will coordinate the two settlements so that the money from your sale is available for your purchase. This usually happens in the middle of the day, between 11 AM and 3 PM.
The Key Confusion
Before settlement, ensure you have arranged insurance for your new home. In Victoria, the risk usually passes to the buyer upon settlement, but it is standard practice (and often a bank requirement) to have insurance in place from the date the contract is signed or becomes unconditional. This protects you if the property is damaged between the contract date and settlement. Don't forget to notify your utility providers (electricity, gas, water, internet) of your move-in date. Some Victorian councils also require you to register your pets at the new address shortly after you arrive. These administrative tasks are best handled in the week leading up to the move.
Finally, keep all your settlement documents in a safe place. You will receive a 'Statement of Adjustments' which shows how the final payment was calculated, including the sharing of rates and taxes between you and the seller. You will also get a 'Final Letter' from your conveyancer confirming the transfer of title. These documents are important for your tax records, especially if the property ever becomes an investment. Celebrate this milestone; you have successfully navigated the most complex legal part of the upgrading process. The house is now officially yours, and you can focus on making it a home.
| Scenario | Cooling-Off Applies? | Notes |
|---|---|---|
| Auction Purchase | No | Binding immediately |
| Private Sale (Residential) | Yes | 3 business days |
| Farming Property (>20ha) | No | Considered commercial |
| Bought 2 days before Auction | No | Proximity to auction rule |
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