The settlement process involves legal handover, financial adjustments, and final inspections before the sale is complete.
Sellers have important responsibilities, including disclosure obligations, mortgage discharge, and council rate adjustments.
Common issues like paperwork errors or buyer delays can slow things down, but a good conveyancer can help keep things on track.
Selling an investment property can unlock new possibilities, whether you're freeing up capital to reinvest, paying down debt, or simply taking a new financial direction. But while finding a buyer is a big milestone, it’s the settlement process that seals the deal.
For many sellers, especially first-time investors, this final stage can be complex. There are legal obligations, tax considerations, timing pressures, and potential pitfalls to navigate. Getting it wrong could delay your sale or leave you exposed to unnecessary costs.
In this guide, we walk through every step of settling an investment property in Australia, from contracts and conveyancers to settlement day hiccups.
What is property settlement?
Settlement is the legal process of transferring property ownership from seller to buyer. In simple terms: it’s when you get paid and hand over the keys.
It marks the official close of your investment journey with that property. And while it might feel like the paperwork is never-ending, each step is there to protect both parties and ensure the transfer is legally binding.
For investment properties, settlement also affects your finances
Beyond the logistics of handover, investment property settlement can have broader implications:
Capital Gains Tax (CGT) becomes payable if you’ve made a profit on the sale
Depreciation schedules may need to be finalised or handed over
Rental tenancy agreements may need to be transferred or ended
Land tax and council rates need to be adjusted between seller and buyer
Getting on top of these details early can prevent last-minute surprises and keeps everything moving smoothly.
The property settlement process in Australia
While the settlement process can vary slightly across states and territories, the key steps are generally the same.
1. Exchange of contracts
This is when both buyer and seller sign identical contracts and agree to a fixed settlement date.
In most cases, a deposit (usually 10%) is paid by the buyer at this point.
In NSW, the buyer may have a five-day cooling-off period (unless waived), but sellers do not have one. Once you’ve signed, you’re committed.
2. Pre-settlement checks and preparation
Your conveyancer or solicitor will:
Review the contract of sale and ensure legal compliance
Communicate with the buyer’s representative
Order title searches and check for encumbrances
Organise settlement figures and rate adjustments
Coordinate with your lender to discharge the mortgage
You may also be asked to provide:
Council rate notices
Body corporate statements (if applicable)
Evidence of compliance with disclosure obligations
3. Final inspection by the buyer
Usually 1-3 days before settlement, the buyer is entitled to inspect the property. They’re checking to make sure the condition is consistent with what was agreed in the contract.
Any damage, removal of fixtures, or failure to meet contractual obligations could delay or jeopardise settlement.
4. Settlement day
On the agreed date, your conveyancer meets with the buyer’s legal team (and both parties' lenders if needed) to:
Transfer funds
Discharge the mortgage
Lodge documents with the Land Titles Office
Finalise all adjustments (rates, land tax, water usage)
Once everything is processed, the buyer receives the title and the keys. You receive the sale proceeds in your nominated account, minus any fees, mortgage balances or tax obligations.
FYI: NSW Fair Trading notes that settlement usually takes place six weeks after contract exchange, but this can vary. Always check your specific agreement.
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Legal and financial considerations when selling
Selling an investment property isn’t just about marketing and negotiation, it also comes with serious legal responsibilities.
Disclosure obligations
Each state has different rules around what sellers must disclose. In Victoria, for example, you’re legally required to provide a Section 32 Vendor Statement. This includes information about:
Zoning
Easements
Rates and charges
Building permits
Planning information
Failing to provide required disclosures can lead to delays or even give the buyer grounds to cancel the contract.
Outstanding mortgages and caveats
You can’t sell a property with a mortgage on the title unless your lender agrees to discharge it at settlement.
Your conveyancer will work with your lender to arrange this, but it's critical to notify your bank as early as possible. Some banks require 10-15 business days' notice.
Financial adjustments
During settlement, you’ll need to split expenses like:
Council rates
Water and utilities
Land tax
Strata levies (if applicable)
These are calculated based on the number of days each party owns the property during the billing cycle.
Consumer Affairs Victoria highlights that fair adjustment of outgoings is essential to avoid post-settlement disputes.
Tax and accounting implications
If you’ve held the property for more than 12 months, you may be eligible for a 50% CGT discount. But even if not, your accountant will need to calculate your capital gain or loss based on your cost base and the sale price.
You might also need to adjust your depreciation schedule or transfer it to the new owner (if the property was tenanted).
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Why a conveyancer or solicitor matters
It might be tempting to manage your own sale, but when it comes to investment properties, the legal and financial stakes are higher.
Engaging a qualified conveyancer or solicitor ensures that:
Your sale contract is compliant and complete
All required searches and legal forms are handled
Rates and taxes are adjusted correctly
Mortgage discharge is coordinated on time
Any legal disputes are dealt with quickly
Common challenges and how to avoid them
Even experienced investors run into roadblocks during settlement. Here are a few of the most common, and how to get ahead of them:
1. Delays in finance approval
If the buyer’s loan is delayed or denied, settlement may need to be postponed, or in some cases, the sale could fall through. Solution? Ask your agent or conveyancer to follow up regularly with the buyer’s team.
2. Errors in documentation
Missing or incorrect details (like a name mismatch or incorrect lot number) can hold up lodgements. Double-check all paperwork early and work with an experienced professional.
3. Outstanding rates or levies
These must be paid or adjusted before settlement. Make sure your council and strata accounts are current.
4. Disputes over condition of property
Ensure the home is in agreed condition for the final inspection. If a tenant has vacated, remove any rubbish and clean professionally if needed.
Frequently Asked Questions
How long is the settlement period?
Generally, 30 to 90 days, depending on what’s agreed in the contract. It can be shorter for cash buyers.
Is there a cooling-off period for sellers?
Not in most states. For example, in NSW, sellers are locked in once the contract is exchanged.
What do I need to disclose as a seller?
This depends on your state. In VIC, it includes rates, zoning, easements, and building permits (Section 32).
Can I sell with a tenant in place?
Yes, but you must disclose this in the contract. The buyer may inherit the lease or negotiate vacant possession.
What does a conveyancer do?
They manage the legal transfer of ownership, including document lodgement, financial adjustments, and communication with all parties.
What if something goes wrong on settlement day?
Delays or disputes can happen. A good conveyancer will help resolve the issue quickly and ensure legal compliance.
What happens next?
Once settlement is complete, the sale is final. You should receive funds in your nominated account and get confirmation that the title has been transferred.
If the property was tenanted, you'll need to update the tenant (or the property manager will do this) and hand over documentation to the new owner. If the buyer is moving in, you may need to coordinate final access and key handover.
This is also the time to speak with your accountant to finalise CGT, update your investment records and plan your next steps, whether that's reinvesting, paying down your home loan, or exploring something new.
Need help planning your next move?
At Aussie, we don’t just help you buy, we help you sell smarter, too. Whether you’re refinancing, upgrading, downsizing or reinvesting, your local Aussie Broker is here to guide you.
We can connect you with expert partners, review your current loan, or help you access equity to fund your next goal.
Chat with an Aussie Broker today and see what’s possible.
