The Settlement Process in Victoria: What Happens Between Contract and Keys

Signing a contract is one moment. Settlement — when you actually own the property and can collect the keys — typically happens 30 to 60 days later. The period in between is where mistakes happen, delays occur, and unprepared buyers find themselves scrambling. Here is exactly how settlement works in Victoria.

The Contract Date vs. Settlement Date

Victoria's purchase process differs from states like New South Wales. There is no separate "exchange of contracts" followed by a distinct "completion." In Victoria, both parties sign a single contract of sale — and that is both the exchange and the legally binding agreement in one step.

Settlement is the separate date when the money changes hands, title is transferred, and possession is handed over. The contract specifies the settlement date, usually 30, 45, or 60 days after the contract date. In an auction, the vendor typically sets the settlement period. In a private sale, it is a negotiated term.

Land transfer duty liability arises on the date you sign the contract. Payment is due within 30 days — but in modern practice, it is paid electronically at settlement.

What Happens in the Settlement Period

Between contract signing and settlement day, several things need to happen in parallel:

Your conveyancer's work:

• Conducts independent title searches and verification
• Obtains council, water, and land tax certificates
• Obtains an Owners Corporation certificate (for strata properties)
• Prepares the Transfer of Land document
• Communicates with the vendor's conveyancer to agree on final settlement figures
• Calculates adjustments — the apportionment of council rates, water charges, and land tax between vendor and buyer
• Sets up the PEXA electronic settlement workspace
• Coordinates timing with your lender

Your bank's work:

• Issues formal, unconditional loan approval
• Conducts a valuation of the property (if not already done pre-auction)
• Prepares mortgage documents for signing
• Loads funds into the PEXA workspace for settlement day
• Registers the mortgage with Land Use Victoria via PEXA

Your tasks:

• Sign all mortgage and loan documentation within the timeframes your bank specifies
• Confirm your settlement funds are ready (deposit, duty payment, all settlement costs)
• Book a pre-settlement inspection

Electronic Settlement via PEXA

All Victorian residential property settlements are conducted electronically through PEXA (Property Exchange Australia). There are no more physical settlement meetings with bank cheques and parties gathering at a title office.

PEXA creates a secure digital workspace that includes your conveyancer, the vendor's conveyancer, your bank, and the vendor's bank. In the weeks leading up to settlement, each party enters the required details, verifies information, and confirms their funding.

On settlement day, PEXA orchestrates a simultaneous exchange:

• Your bank transfers the loan funds into the workspace
• Land transfer duty is paid directly to the State Revenue Office
• The vendor's mortgage (if any) is discharged
• The vendor receives the net sale proceeds
• The title transfer is lodged with Land Use Victoria and updated on the central registry in real time

Settlement typically completes within minutes of the nominated settlement time, and you receive notification shortly after. You can then collect the keys from the selling agent.

The Pre-Settlement Inspection

You are entitled to inspect the property immediately before settlement — typically within 24 to 48 hours of the settlement date. This is not a second building inspection. It is a final check to confirm:

• The property is in the same condition as when you signed the contract
• All inclusions listed in the contract are still present (light fittings, dishwasher, curtains — check the contract's inclusions list)
• The vendor has vacated and removed their belongings
• No new damage has occurred during the settlement period

If something is wrong — a light fitting has been removed, there is new damage, the vendor has not vacated — contact your conveyancer immediately before settlement. A settlement can be deferred pending resolution. Do not accept damaged or deficient possession quietly after settlement, when your leverage is gone.

What Adjustments Are Made at Settlement

Settlement figures include adjustments — rebalancing of costs that the vendor has already paid or owes.

Council rates. If the vendor has paid rates for the current quarter and you are settling mid-quarter, the vendor gets a credit for the unused days. If the rates are overdue, you may take on liability.

Water charges. Similar to rates — adjusted proportionally based on the settlement date.

Land tax. If the vendor is liable for land tax on the property, the amount is adjusted at settlement.

Owners Corporation levies (strata). If the vendor has prepaid their next quarter's OC levy, they receive a credit for the days remaining after settlement.

Your conveyancer calculates all these adjustments. The final settlement figure — what your bank needs to transfer — is only confirmed a few days before settlement.

What Can Go Wrong

Finance not confirmed. If your bank does not issue unconditional approval before the settlement date, you cannot settle. If you purchased at auction (unconditional contract), failure to settle is a default with serious financial consequences — the vendor can sue for damages and retain your deposit. Unconditional pre-approval before auction is not optional.

Valuation shortfall. The bank conducts a valuation at some point before settlement. If the property has fallen in value since contract signing, the bank will lend only against the lower value. The difference — the "valuation gap" — must come from your own funds. This risk is more acute in off-the-plan purchases where 12–24 months elapse between contract and settlement.

Vendor's mortgage not discharged. If the vendor's bank does not discharge their mortgage by settlement time, settlement cannot proceed. This is the vendor's problem to solve, but it can cause delays.

Missing documents. Missing or unsigned mortgage documents on your end can prevent your bank from loading funds into PEXA in time. Process your mortgage documents as soon as your bank issues them — do not let them sit for a week.

Settlement extension requests. Either party can request an extension if they cannot settle on the nominated date. Extensions are usually granted by agreement, but are not automatic. If a vendor refuses an extension and you cannot settle on time, you may be in default. Know the deadline and manage your timeline conservatively.

After Settlement

On settlement day, contact the selling agent to collect the keys. The agent holds the keys until PEXA confirms settlement is complete.

After settlement, you are responsible for:

• Arranging building and contents insurance (organise this before settlement — technically you should have cover from the day you sign the contract, as risk in Victoria transfers to the buyer from contract signing)
• Updating your address with relevant authorities
• Notifying the local council of the ownership change (your conveyancer typically lodges notification, but confirm)
• Checking that any adjustments made at settlement have been properly applied against outstanding charges

The PEXA title registration is essentially instantaneous — Land Use Victoria updates the register in real time as part of the settlement process. You do not need to wait for paper certificates.

The Victoria First Home Buyer Guide includes a complete settlement timeline from contract to keys, a pre-settlement inspection checklist, and a settlement cost worksheet that breaks down exactly what your bank needs to transfer on the day. Get the complete guide at firsthomestartguide.com/au/victoria/first-home/.

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