What actually happens at settlement in Victoria.

Settlement is the moment a Victorian property changes hands. It is not a meeting; it is not a paper exchange; it is a coordinated electronic transaction in which money moves, mortgages are discharged and registered, and legal ownership passes — all in the same breath, in an online workspace on PEXA.

This guide explains what settlement means, how the electronic workspace works, what the buyer and seller each need to prepare, how adjustments and final inspection fit in, and what happens if settlement does not occur on time.

What settlement means

Settlement is the completion of the contract of sale. On settlement, the buyer pays the balance of the purchase price, the seller's outgoing mortgage is discharged, the buyer's incoming mortgage (if any) is registered, the transfer of land is lodged with Land Use Victoria, and legal ownership passes to the buyer.

The contractual settlement date

The settlement date is set by the contract of sale — commonly 30, 60 or 90 days from the date of contract, but any period agreed by the parties. If settlement does not occur on that day, penalty interest can begin to run and the non-defaulting party may serve a default notice.

Ordinary settlement periods

Standard periods are usually chosen to give lenders enough time to prepare mortgage documents and give sellers enough time to arrange discharge. Off-the-plan settlements are longer — often years — and are triggered by registration of the plan of subdivision and issue of an occupancy permit.

Why the contract controls

The contract's general and special conditions determine the settlement mechanics — the settlement date, adjustments basis, deposit release, default interest rate, and dispute-resolution steps. When there is a conflict between what the parties expected and what the contract says, the contract wins.

Electronic conveyancing and PEXA

Since 1 August 2019, all mainstream Victorian property transfers have been required to complete electronically. In practice, that means through PEXA — Property Exchange Australia — the electronic lodgment network operator that provides the workspace where parties assemble documents, sign digitally and move funds.

The roles of the parties

The buyer and seller are represented in the PEXA workspace by their conveyancer or lawyer. The seller's outgoing lender is present to discharge the mortgage; the buyer's incoming lender is present to register the new mortgage and release loan funds. The buyer and seller themselves are not parties to the workspace — their representatives act on their behalf under signed client authorisations.

Preparation of the transfer

In the days before settlement, the buyer's representative prepares the transfer of land and other electronic instruments, requests confirmation of stamp-duty assessment, and verifies purchaser identity. The seller's representative prepares the discharge of mortgage instrument and confirms payout figures with the outgoing lender.

Identity verification and client authorisation

Every party to a PEXA transaction must be identified to a standard set by the Verification of Identity model rules — typically face-to-face with an approved photo identifier, or via a compliant identification agent. The client also signs a Client Authorisation authorising the representative to act in the workspace on their behalf.

Purchaser duty information

Buyers pay Victorian land transfer duty ("stamp duty") at settlement. The duty is calculated on the contract price (or higher unencumbered value in some cases). The buyer's representative lodges a Digital Duties Form with the State Revenue Office and obtains an assessment. Concessions (first home buyer, off-the-plan, principal-place-of-residence) and additional foreign-purchaser duty are applied at assessment.

Source of funds

The buyer's representative reconciles the source of funds — deposit already paid, loan proceeds from the incoming lender, and the balance from the buyer's own cash. Each figure must be present in the workspace ready to be released at settlement.

Loan documents

Loan documents must be signed and returned to the lender well ahead of settlement. Lenders will not release funds until they are satisfied that valuation, documents, insurance and identification are complete.

Mortgage discharge and payout figures

The seller's outgoing lender confirms the payout figure — the amount required to discharge the mortgage on the settlement date, including any daily accruing interest and early-repayment fees. The seller's representative includes this figure in the settlement statement.

Adjustments

Adjustments spread the cost of periodic outgoings across the day of settlement. Council rates, water rates, owners corporation fees, land tax (where the contract permits adjustment) and — for tenanted properties — rent, are all apportioned. Adjustments are calculated on the last-issued notices and the most recent water usage.

Deposit credit

The deposit already paid by the buyer to the seller's agent (or released early under a section 27 statement) is credited against the balance due at settlement.

Final inspection

The buyer is entitled to inspect the property in the seven days before settlement. The property must be in substantially the same condition as at the day of sale, fair wear and tear excepted, with all included chattels present and all excluded items removed. Vacant possession — where required — means empty of people, tenants and anything not part of the sale.

Property condition, goods and fixtures

Included chattels must be in working order at final inspection. Fixtures (items attached to the property) transfer with the land unless expressly excluded. If chattels are missing or broken, the buyer's representative raises the issue with the seller's representative; disputes can be resolved by adjustment at settlement or a small retention.

Vacant possession, keys and access devices

Where the contract requires vacant possession, the buyer receives keys, garage remotes, alarm codes and access fobs at settlement, usually held by the selling agent and released once the conveyancer confirms the workspace has settled.

Settlement statements

Both representatives prepare a settlement statement showing the price, deposit paid, adjustments, and net funds moving to and from each party. Statements are exchanged and reconciled in the days before settlement. Any discrepancy must be resolved before the workspace can be signed and locked.

The electronic workspace

In the workspace, each party signs the transfer, mortgage discharge, new mortgage and other electronic instruments. Once all parties have signed and balanced, the workspace is "locked" for settlement.

Financial settlement

At the booked settlement time, the workspace settles. In a single atomic transaction, funds move from the buyer and buyer's lender, the outgoing mortgage is paid down, adjustments and commissions are paid, and the net proceeds are transferred to the seller's nominated account.

Lodgement and registration

The transfer of land and any new mortgage are lodged with Land Use Victoria the same day. The discharge of the outgoing mortgage is registered at the same time. Within minutes the register reflects the new proprietor and encumbrances; within days the updated title is available.

When legal ownership passes

Legal ownership passes when the transfer is registered on title. Practical possession — the right to keys and use of the property — passes at settlement itself, subject to the workspace settling and funds moving.

Simultaneous settlements

Where a buyer is selling one property and buying another on the same day, both workspaces are booked to settle at the same time or in sequence. Coordination between representatives is essential; a delay in the sale can cascade into a shortfall for the purchase.

Sale proceeds and commission

The real estate agent's commission is deducted at settlement out of the sale proceeds. The seller's representative directs the net proceeds to the seller's nominated bank account.

Foreign-resident capital gains withholding

Under the ATO regime, from 1 January 2025 the buyer must withhold 15 per cent of the price on any sale of Australian real property from a foreign-resident seller and remit it to the ATO. Australian-resident sellers must produce a clearance certificate to avoid withholding. Withholding is calculated and directed within the PEXA workspace.

GST withholding

For sales of new residential premises or potential residential land where GST applies, the buyer must withhold a portion of the price at settlement and pay it directly to the ATO. The seller must give a section 14-255 notice to the buyer before settlement.

Delayed settlement

If settlement does not occur on the booked day, PEXA can roll the booking to a later slot the same day or the following business day. Common causes are missing loan documents, unbalanced workspaces, lender representatives offline, or delayed discharge authorities.

Default interest

The contract's default-interest clause specifies the rate at which interest accrues on any late payment. Under the standard general conditions, default interest is usually set at a defined margin above the RBA cash rate. Default interest is calculated from the contractual settlement date, not the eventual settlement date.

Notices of default, penalties and termination risks

If a party fails to settle, the other party can serve a rescission notice (usually 14 days) under the contract. Continued default entitles the non-defaulting party to terminate the contract, forfeit or recover the deposit, and pursue damages — including the difference between the contract price and the eventual resale price.

What happens immediately after settlement

• Buyer's conveyancer notifies council, water authority and (for apartments) owners corporation manager of the change of ownership.
• Seller's conveyancer disburses net proceeds and closes the file.
• Selling agent releases keys and access devices to the buyer.
• Buyer arranges connection of utilities and updates insurance.
• Buyer receives confirmation of title registration within a few days.

Buyer's checklist

• Identity verified with your conveyancer.
• Client authorisation and Digital Duties Form signed.
• Loan documents signed and returned to lender.
• Building insurance in place from the date required by the contract.
• Balance funds available in cleared form the day before settlement.
• Final inspection completed in the seven days before settlement.
• Utility connection arranged.
• Bank details provided to conveyancer for any refund.

Seller's checklist

• Discharge authority signed and returned to outgoing lender.
• ATO clearance certificate obtained.
• Most recent rates, water and land tax notices provided.
• Owners corporation certificate up to date (for apartments).
• Move-out completed before final inspection.
• Keys, remotes, alarm codes and manuals left with selling agent.
• Nominated bank account for sale proceeds provided.

How we can assist

Our property lawyers act on PEXA settlements every day — for buyers, sellers, off-the-plan purchasers, SMSFs and business owners. Settlement is invisible when it goes well because the work happens in the weeks beforehand.

This article is current as at 16 July 2026 and provides general information about property settlement in Victoria. Specific transactions can involve additional issues — off-the-plan registration, tenanted settlements, corporate purchasers, cross-border sellers — that warrant specific legal advice.