About property settlement
You set the date of settlement in the contract of sale. The settlement period is usually 30 to 90 days and can be negotiated with the buyer.
Settlement is the date when the buyer:
- pays you the balance of the purchase price
- receives the property title and becomes the registered owner
- takes possession of the property, unless otherwise arranged.
This is an official process usually conducted between your legal and financial representatives and the buyer's representatives.
At settlement, all outgoings such as rates and other charges are adjusted between you and the buyer.
You are responsible for rates up to and including the day of settlement. The buyer is responsible for rates from the day after settlement.
Home insurance
Even though your insurance may cover the property up to the date of settlement, the buyer's lender will recommend they take out building and contents insurance effective from the date you sign the contract. This is to safeguard the lender's interest in the property, as well as the buyer's.
Pre-settlement property inspection
Buyers are entitled to inspect the property at any reasonable time during the week before settlement. Buyers can contact the agent to arrange this inspection.
The contract of sale requires you to hand over the property in the same condition as when it was sold.
Taking possession of the property
Once settlement is completed, the buyer can collect the keys from your estate agent and take possession of the property.
Land transfer duty (stamp duty)
The buyer is responsible for paying land transfer duty (formerly known as stamp duty) on the sale.
Land transfer duty is calculated as a percentage of the purchase price or the market value of the property, whichever is greater. Duty is calculated on a sliding scale, starting at 1.4 per cent for properties valued at $25,000 and rising to 5.5 per cent for those valued at or above $960,000.
For a newly built property, this is the GST-inclusive price.
The duty is usually paid at settlement but the buyer has up to 30 days after settlement to pay. If the buyer does not pay the duty within the required time, a penalty tax and interest may apply. The buyer cannot get title to a property until they have paid the duty.
There are exemptions and concessions for first home buyers and where the property is the buyer’s principal place of residence.
First home buyers who entered into a contract on or after 1 July 2017 are exempt from duty for property valued up to $600,000, and are eligible for a concession for property valued between $600,001 and $750,000.
There is also a duty concession if the property is the buyer’s principal place of residence, if it is valued between $130,001 and $550,000 and the contact was entered into on or after 1 January 2007.
For more information, visit State Revenue Office.
Transfer of land
The transfer of land is a document that transfers ownership of the land from you to the buyer.
If two or more people are buying the property together, the transfer of land document sets out whether they will hold the property jointly or as tenants in common:
- Jointly-held property - if one person dies, ownership of the property automatically transfers to the survivor(s).
- Tenants in common - tenants in common effectively hold shares (equally or otherwise) in the property and each has the right to dispose of their share of the property as they see fit.
The buyer’s legal practitioner, conveyancer or lender usually lodges the transfer of land document with Land Use Victoria.