Contemporaneous Settlement

Melbourne's property market is famously fast moving. Many homeowners find themselves needing to sell their current house and pick up the keys to a new one on the very same afternoon. When both transactions settle together, lawyers and conveyancers call it a contemporaneous or simultaneous settlement. Done well, it keeps life simple: one mortgage ends, another begins, and you dodge the cost of short-term financing. Done poorly, it can leave you stranded in a removal van with no title, no cash and no place to sleep. This guide walks you through the nuts and bolts of contemporaneous settlement in Victoria, highlighting the benefits, the pitfalls and the steps a Melburnian seller-buyer must follow.

What Does Contemporaneous Settlement Mean?

At its simplest, a contemporaneous settlement occurs when the sale of one property and the purchase of another are scheduled to complete on the same day, often within minutes of each other. Funds from the outgoing sale flow straight into the incoming purchase, so there is no gap where you would otherwise need bridging finance. In most Victorian transactions, the two workspaces are digitally "linked" so neither party can settle until both are ready, creating a single, interdependent event.

Why Melburnians Choose Contemporaneous Settlement

Moving house in Melbourne can be expensive. Stamp duty, removalists and double mortgage payments quickly eat into any profit from selling. A contemporaneous settlement minimises those costs by allowing you to:

Apply sale proceeds directly to your new purchase, so you borrow less and avoid costly bridging interest.
Move once no storage shed, no two week Airbnb, no juggling school enrolments.
Keep stress down, because everything happens in a single, choreographed window rather than over two separate settlement periods.

The Essential Legal Framework in Victoria

All Victorian land transfers fall under the Transfer of Land Act 1958. Since 2018, almost every settlement must take place electronically on the Property Exchange Australia (PEXA) platform, and the Act now recognises digital dealings. Contracts commonly include a "subject to sale and settlement" clause tying the purchase to the successful settlement of your own sale – a safety valve if something derails the first leg. Your conveyancer will lodge the transfer of land, discharge the old mortgage and register the new one in rapid succession once both linked workspaces reach the ready to settle stage.

Common Risks and How to Manage Them

Because the two files are inseparable, a hiccup on one side halts both. Typical issues include:

Late bank cheques or loan approvals – check your lender's readiness a week out.

Outstanding building or council certificates – order searches early so you can satisfy any special conditions.

Human error in the digital workspace – an incorrect title reference or payout figure can cause a last-minute "unbalanced" status. Your conveyancer should double check data the day before settlement.

Step-by-Step Timeline

Contract stage – insert a clause making the purchase conditional on the contemporaneous settlement of your sale.
Finance approval – ensure your lender accepts the linked settlement timetable and will supply cleared funds on the day.
PEXA invitation – conveyancers create two workspaces, then link them so settlement cannot proceed unless both reach "ready".
Pre-settlement inspection – typically the day before, giving you time to flag any property damage that might jeopardise settlement.
Settlement day – morning phone huddle between both conveyancers, confirmation of balances, then PEXA auto completes the sale first and instantly rolls the proceeds into the purchase workspace.
Handover – once the purchase settles, your agent releases the keys, you collect the removal truck and head to the new address.

Digital Settlements and the PEXA Factor

PEXA has made same day settlements far smoother than the old paper method. Funds clear in real time, titles register instantly, and you no longer need couriers criss crossing the CBD. Yet the system is only as strong as its weakest link. A bank outage or registry glitch can still bring hundreds of linked deals to a standstill a parliamentary inquiry opened this year after a high profile February outage left buyers sitting in removal vans for hours. Always build a plan B into your moving schedule, and stay in close contact with your conveyancer on the morning of settlement.

Finance Considerations: Bridging vs Linked Funds

If the sale price comfortably covers the purchase price and costs, a contemporaneous settlement usually beats a bridging loan. You pay one set of legal fees, save thousands in interest and avoid paying lenders mortgage insurance twice. Where the numbers are tighter for example, moving from a modest unit in Coburg to a bigger house in Preston your broker may advise partial bridging finance. In that case, the bank still expects both transactions to settle together so it can discharge the old mortgage and register the new one in one clean sweep.

Practical Moving Day Tips

Melbourne's traffic is unpredictable, so collect your keys before the removal truck leaves the first property. Label boxes by room to avoid searching for the kettle at midnight. If you have pets, book them into day care to spare them the chaos. And remember: utilities can only be transferred once the purchase settles line up gas, electricity and NBN accounts for activation that evening rather than first thing in the morning.

The Role of Your Conveyancer and Agent

Your conveyancer is the maestro who keeps all parties in tempo. They draft special conditions, chase certificates, coordinate with banks and monitor the PEXA workspaces from "created" to "complete". Your selling agent handles final meter readings, arranges key release and, crucially, keeps both buyers calm if an unexpected delay hits. A strong team that communicates openly can rescue a settlement on the brink, so choose professionals with proven same day experience.

Frequently Asked Questions

What happens if one settlement fails? Both fail. The contracts may allow a short extension, but penalties can apply, so act fast.

Can I still do a paper settlement? Only in rare circumstances approved by Land Use Victoria. Almost all transfers are e-settled today.

Do I pay stamp duty twice? No. Duty is payable only on your purchase, not your sale, and must be lodged with the State Revenue Office within three months of settlement.

Conclusion: Ready to Settle?

Contemporaneous settlement lets you leap from one Melbourne home to the next in a single, well timed hop. It demands precision, clear communication and seasoned professionals, but the savings and simplicity are worth it. Thinking of moving soon? Call Pearson Chambers Conveyancing for friendly, expert guidance and a free Section 32 contract review. We make sure both legs of your journey land on the same day with your feet up in the new lounge by nightfall.

Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au