The Property Settlement Process Explained

Property settlement is the legal process of transferring ownership of a property from the seller to the buyer. It is the final stage of a property transaction, where funds are exchanged, legal documents are lodged, and the title officially changes hands.

In Victoria, settlement is conducted electronically through PEXA, meaning you do not need to be physically present.

While settlement day itself can feel like a formality, a great deal of work happens behind the scenes in the weeks leading up to it. Your conveyancer manages this entire process, coordinating with lenders, conducting searches, calculating adjustments, and ensuring every detail is in order for a smooth exchange.

The settlement process begins when both parties sign the contract of sale. At this point, the buyer typically pays a deposit — usually 10% of the purchase price — which is held in trust by the estate agent or a nominated stakeholder until settlement.

The contract sets out all the terms of the sale, including the purchase price, settlement period, any special conditions (such as subject to finance or building inspection), and the obligations of each party.

Your conveyancer should have reviewed the contract and Section 32 vendor statement before you signed.

For private sales in Victoria, the buyer has a three clear business day cooling-off period starting the day after the contract is signed. During this time, the buyer can withdraw from the contract, although a penalty of 0.2% of the purchase price applies.

It is important to note that auction purchases have no cooling-off period. The contract is binding the moment the hammer falls. This is why we always recommend having your contract and Section 32 reviewed before auction day.

Tip: Use the cooling-off period to finalise your finance application and arrange building insurance. Do not assume that cooling off is automatic — you must give written notice to the vendor or their agent to exercise this right.

Once the contract is signed, your conveyancer begins a comprehensive program of searches and due diligence. These searches verify the information provided in the Section 32 and uncover any issues that may affect the property or your purchase.

Typical searches include:

• Title search: Confirms the current registered owner and identifies any encumbrances such as mortgages, caveats, easements, or covenants.
• Council property certificate: Reveals outstanding rates, planning information, building permits, and any notices affecting the property.
• Water authority certificate: Shows outstanding water charges and whether the property is connected to sewerage.
• Planning certificate: Confirms the zoning and any overlays that apply to the land.
• Owners corporation certificate: If applicable, provides financial statements, rules, and details of any upcoming special levies.

Your conveyancer reviews the results of each search and advises you of any findings that require attention.

If your purchase is subject to finance, your lender will work through their approval process during the settlement period. Your conveyancer liaises directly with your lender or mortgage broker to ensure all documentation is provided on time.

Once your finance is formally approved, your lender issues a letter of offer and prepares mortgage documents for you to sign.

Your conveyancer verifies the loan details, ensures the mortgage is registered correctly, and coordinates with the lender's settlement team for settlement day.

Tip: Keep in close contact with your broker or lender during this stage. Delays in providing documents to your lender can push out finance approval and jeopardise your settlement date.

You are entitled to conduct a final inspection of the property before settlement. We recommend doing this 7 to 10 days before settlement to allow time to raise and resolve any issues.

During the inspection, check that:

• The property is in the same condition as when you signed the contract
• All fixtures and fittings included in the sale are still present
• Any agreed repairs have been completed
• The property is vacant (unless otherwise agreed) and reasonably clean
• All keys, remotes, and access devices are available

If you identify any issues during the inspection, notify your conveyancer immediately. In most cases, issues can be resolved before settlement through negotiation with the vendor's conveyancer.

On settlement day, everything comes together.

Your conveyancer prepares the final settlement statement, which calculates the exact amount due after adjustments for council rates, water rates, owners corporation fees, and any other outgoings.

Settlement is conducted electronically through PEXA. Here is what happens:

• Your lender transfers the loan funds to the PEXA workspace
• Stamp duty is paid to the State Revenue Office
• The balance of the purchase price is transferred to the vendor
• The transfer of land is lodged with Land Use Victoria
• The vendor's mortgage is discharged from the title
• Your lender's mortgage is registered on the title

The entire process takes just minutes once all parties are ready. You will receive confirmation from your conveyancer as soon as settlement is complete.