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You’ve done the hard part. You survived the inspections, the finance paperwork, the Section 32, the back and forth with the agent. You’ve booked removalists, lined up the lift booking (if it’s an apartment), and told your mate with the ute you’re finally moving out of that Carlton share house.
Then settlement day arrives and you get the message that makes your stomach drop.
‘The vendor’s still in the property.’
It’s more common than people think. In Melbourne, settlement is usually handled electronically and can still feel a bit mysterious, even when everything is going smoothly. When it’s not going smoothly, it can feel personal. Like you’re being messed around. Most of the time it’s not malice, it’s poor planning, a moving truck that didn’t turn up, a chain of settlements slipping, or someone leaving packing to the last minute (we’ve all met that person).
Still, it’s your purchase, your money, and your moving plans on the line. So what do you do next?
Start with the boring bit: what does your contract actually promise?
The key question is whether you’re entitled to ‘vacant possession’ at settlement.
In plain language, vacant possession means you get the property empty. No vendor. No tenants (unless you agreed otherwise). No boxes piled in the garage. No surprise ‘We’ll be out by tonight, promise.’
Many Victorian contracts provide for vacant possession unless the property is being sold subject to an existing tenancy. Sometimes a contract includes a special condition allowing the vendor to stay on for a short period (sometimes called ‘licence’ arrangements). It might also be sold with a tenant in place, which is a completely different situation.
So step one is not an argument with the agent, it’s a quick check of what you signed.
If you bought your first home to live in (especially if you’re relying on first home buyer benefits with occupancy rules), vacant possession is usually a must. If you bought an investment with a tenant, your expectations need to match the paperwork.
Why sellers are still there on settlement day (the usual suspects)
When a vendor hasn’t moved out, there’s usually a reason that sounds innocent enough, right up until it becomes your problem:
Their next purchase hasn’t settled yet and they’re stuck waiting for keys elsewhere.
Removalists cancelled or the move took longer than expected.
Settlement time is earlier than they expected, and they assumed they had all day.
They’re still cleaning and patching and want to ‘finish it off’.
A tenant hasn’t vacated, even though the vendor expected they would.
The property is packed and they’re simply not ready.
None of these reasons changes the contract. It just tells you what kind of solution might actually work.
The best protection happens before settlement, not during the panic
If you’re still a week or two away from settlement and you’re reading this because you’re worried, there are a few simple moves that reduce the chances of a nasty surprise.
Book the final inspection with timing in mind
In Victoria, buyers usually do a final inspection close to settlement. The inspection isn’t just a formality. It’s your chance to check the property is in the same condition as when you signed, and to confirm it’s ready to hand over.
If vacant possession matters to you (and for most home buyers it does), try to arrange the inspection when the property is likely to be empty, or at least nearly empty. Walking through while the vendor’s still living there can make it harder to spot issues. It also makes it hard to judge whether they’ll actually be out in time.
Ask direct questions through the right channel
The agent might sound confident, but what matters is what gets communicated to the vendor and their conveyancer. If you’re getting hints like ‘They’ll move out on the morning’, that’s a sign to tighten things up. Your conveyancer can push for clarity and, where needed, written arrangements.
Keep your own plans flexible where you can
I know, easier said than done. Removalists, cleaners, end of lease dates, storage, childcare, work rosters. Real life doesn’t bend easily. Still, if you can avoid booking everything for the same morning as settlement, it takes some pressure off.
And if you can’t, that’s fine too. It just means you need a stronger plan if things go sideways.
Settlement day arrives and the seller hasn’t moved out. What now?
This is where people can accidentally make a costly mistake, usually because they just want the keys and want it over.
If your contract requires vacant possession, you generally have options. The right option depends on the facts, your risk tolerance, and what your lender is doing. The safest move is to get your conveyancer involved straight away and avoid making side deals with the agent on the fly.
Here are the usual pathways.
Option one: delay settlement until the property is vacant
If you’re entitled to vacant possession, you can often instruct your conveyancer not to complete settlement until the vendor can give you the property empty, as promised.
That can feel scary because you’ll worry you’ll be blamed for ‘delaying settlement’. The reality is more grounded. Settlement is meant to happen when both sides can meet their obligations. If the vendor can’t provide what the contract requires, your conveyancer can help you protect your position.
There can still be practical consequences. Your bank might have booked funds for a certain day. Your own moving costs might climb. That’s why it’s worth getting clear advice fast, not after you’ve agreed to something in a rushed phone call.
Option two: agree to a short extension, but only in writing and on terms
Sometimes delaying settlement for a day or two is the simplest solution, especially when the vendor genuinely will be out very soon.
If you go down this path, treat it like a proper agreement, not a casual promise. A written variation can cover things like:
the new settlement date and time
what happens if the vendor still isn’t out
who pays what costs caused by the delay
confirmation that the property must be left clean and empty
A short extension can be reasonable. An open ended ‘Just give them a bit longer’ is where trouble starts.
Option three: allow settlement, but only with a strict licence arrangement
Some buyers decide they still want settlement to go ahead (maybe because their finance is lined up and rebooking is painful), and they let the vendor stay on for a short time after settlement.
This can work, but it needs tight controls because once you settle, you become the owner and you carry real risk.
A proper short term licence arrangement can deal with:
a firm move out deadline
a daily fee for staying on
who pays utilities during the extra time
what happens if they don’t leave on time
access for you (and whether you can change locks once they’re gone)
a security amount held back to cover damage or cleaning
This sort of arrangement must be drafted carefully. Done badly, it can drift into tenancy style rights, and nobody wants that surprise.
A quick reality check on ‘penalty interest’
Buyers often assume the vendor has to pay ‘penalty interest’ if the vendor causes the delay. In Victorian property sales, penalty interest is usually tied to late payment of money, which is normally a purchaser obligation.
That doesn’t mean you’re stuck wearing the cost of a vendor caused delay. It just means the claim is usually framed as compensation for actual losses you suffer, rather than a simple interest calculation.
This is one of those moments where a calm, experienced conveyancer makes a huge difference. There’s a right way to hold the vendor to account without accidentally putting yourself in breach.
What costs can you recover if the vendor’s delay causes you loss?
If the vendor’s failure to give vacant possession causes you to lose money, you may be able to claim reasonable, foreseeable costs. Think ‘real expenses you can prove’, not a vague figure because the day was stressful.
Common examples we see around Melbourne settlements include:
extra rent because you can’t move in yet
storage fees if your belongings have to go somewhere temporary
removalist cancellation or rescheduling charges
short stay accommodation costs
additional bank fees tied to rescheduling settlement
extra legal or conveyancing work directly caused by the breach
Two practical tips matter here.
Keep records from the start
Save invoices, receipts, emails, and screenshots. If you had to book a hotel near the CBD because your move fell apart, keep that receipt. If your removalist charged a rebooking fee, keep it. These situations often resolve quickly, and people forget to document the costs until weeks later.
Try to limit your losses where you reasonably can
You don’t have to be a hero, but you do need to act sensibly. If there’s a choice between a $350 storage option and a $2,000 storage option for the same job, you may be expected to choose the reasonable one. It’s not about being cheap, it’s about being fair and defensible.
What if settlement has already happened and the seller still won’t leave?
This is the nightmare version. You’ve settled, you’re the registered owner (or on the way to it), and the vendor is still inside the house like it’s still theirs.
At that point, it’s not a ‘settlement delay’ problem, it’s an occupation problem. The steps usually look like this:
Get your conveyancer onto it immediately so communication happens formally and in writing.
Avoid confrontation at the property. It’s stressful and it can escalate quickly.
Push for a clear, documented move out time and practical handover steps (keys, garage remotes, alarm codes).
If they still refuse, you may need to take enforcement steps to regain possession. The right pathway depends on the facts and the paperwork.
People often ask if the police will just remove them. In most cases, police treat it as a civil dispute unless there’s a safety issue. That’s why early, formal action through your conveyancer is so important.
And once the property is finally vacant, changing the locks is a sensible step. You’d be surprised how many spare keys float around after years of ownership, renovations, dog sitters, neighbours, and tradies.
A few Melbourne specific quirks to keep in mind
Settlement timing can be tight. Many settlements happen during business hours and can be affected by banking cut offs and electronic workspace timing. If the vendor is still packing at 11 am and settlement is booked for 2 pm, that’s not much wriggle room.
Apartments add layers. Concierge access, lift bookings, loading dock rules, and move in windows can turn a one day delay into a week of headaches.
End of year pressure is real. In December and January, moves, holidays, and reduced staffing can make small delays snowball.
None of this is meant to scare you. It’s meant to normalise the fact that settlement is a process, not a magical moment, and you deserve someone in your corner who knows the local rhythm.
A note for sellers (because this is fixable with planning)
If you’re selling, please don’t plan to move out on the morning of settlement unless you have no other choice. Settlement can move earlier or later in the day. Removalists can be late. Cleaning always takes longer than expected. And buyers are not being difficult when they insist on an empty property, they’re protecting what they paid for.
A smooth settlement in Melbourne usually comes down to one thing: being ready the day before, not the hour before.
If you’re facing this right now, we can help
If your settlement is approaching and you’re worried the seller won’t be out, or you’ve been told they ‘need a bit more time’, it’s worth getting advice before you agree to anything. These situations can be resolved well, but the wording and timing matter.
Pearson Chambers Conveyancing can guide you through your options, speak with the other side, and help you protect your position so you can actually move in when you planned to. We also offer a complimentary Section 32 contract review, which is often where vacant possession issues and special conditions show up in the first place.
Email contact@pearsonchambers.com.au and we’ll talk you through the next step.