What happens between exchange and settlement in NSW

The first days after exchange

On exchange, each side signs a copy of the contract and the copies are swapped. From then, both sides are bound.

The buyer pays the deposit as the contract requires.

For most residential purchases, the buyer then has a cooling-off period of 5 business days, ending at 5pm on the fifth business day.

If you withdraw in that period, you must give written notice and you forfeit 0.25% of the price.

There is no cooling-off period if you bought at auction, or if you gave a 66W certificate.

The settlement date

The contract states the settlement date.

Settlement is usually about 6 weeks after exchange. The parties can agree on a different time.

Every step in this period works back from that date. Your lender, your solicitor and the seller's solicitor all plan around it.

Checks and enquiries

In this period your solicitor checks the property and the title. The checks include:

1. Whether a government authority has an interest in the land, or a planned development could affect it.
2. Whether there is land tax owing on the property.
3. Whether swimming pool compliance documents are needed.
4. For a strata lot, the levies, any levy owing, and the scheme's records.

If a check shows a problem, your rights depend on the contract. We advise you on what the contract allows and act on it.

Land tax clearance

Unpaid land tax is a first charge on the land. If it is not paid, a new owner can become liable for it.

The seller must give the buyer a current land tax clearance certificate at least 14 days before settlement.

We check that the certificate is current, that it is for the right property, and that any land tax shown is paid at settlement.

Your loan and the money

If you are borrowing, your lender must be ready to settle on the settlement date.

We review the mortgage documents with you and keep your lender informed of the date.

Transfer duty must be paid by settlement, or within 3 months of signing the contract, whichever comes first. On a standard purchase settling in about 6 weeks, that means duty is due by settlement.

Council and water rates are adjusted. The seller pays up to the settlement date and the buyer pays from it.

We send you the final figures before settlement, so you know the amount you must have ready.

The final inspection

The NSW Government suggests you inspect the property on the morning of settlement.

The purpose is to confirm it is in the same condition as when contracts were exchanged, and that the inclusions in the contract are still there.

If something is wrong, tell us before settlement takes place.

Where buyers get caught

Treating the deposit date as flexible.

The deposit is due when the contract says. Pay it on time, by the method the contract allows.

Forgetting the cooling-off deadline.

The period ends at 5pm on the fifth business day. After that, you are bound.

Not checking the land tax certificate.

A certificate for the wrong year, or the wrong property, does not protect you. Unpaid land tax stays with the land.

Changing your loan late.

A late change to the loan can mean the lender is not ready on the settlement date.

Paying money on an emailed request.

Revenue NSW warns of scams involving payment requests in property matters. Confirm any bank details with your solicitor by phone before you pay.

Common questions