What are Simultaneous Settlements?

Published On: 23 March 2023

Settlement is the final step when transferring the ownership of a property from the seller to the buyer.

A Simultaneous Settlement is when the settlement for the sale of your current property and the settlement of the purchase of your new home happen at the same time.

Simultaneous Settlements often need to be completed on the same day due to practical or financial circumstances.

This can be a tricky process, so have a Conveyancer coordinate the settlements on your behalf.

There are important points for you to consider.
Contracts

The contract to purchase your new home should contain a clause that says “the purchase is subject to the settlement of the sale of your current property”. This means that if the sale settlement does not go ahead or is delayed, then you are not in breach of the contract to purchase your new home.

As the two transactions rely on each other, the documentation needs to reflect this, even if the transaction is “cash”.

If the sale of your current property doesn’t happen when it should, then you cannot access funds from the sale for the purchase settlement. Which means the purchase of your new home may not be able to take place.

Chain of linked settlements

Occasionally, there is a chain of simultaneous settlements happening on the same day, each settlement relies on the preceding one occurring.

Sometimes there is a problem with a settlement earlier in the chain. This may happen if the seller of the property you are buying is also purchasing a property!

If there is a problem in a linked settlement, how it affects your purchase will depend on where your transaction sits in the chain. Your conveyancer may know that there is a problem a few days before settlement, but sometimes they only find out the day before or the morning of settlement.

How to make linked settlements easier
  • You could consider a longer settlement to ensure all properties have the best chance of being sold.
  • Appoint a conveyancer, as simultaneous settlement can be complicated.
  • Be flexible if there is a last minute delay.
Advantages of simultaneous settlement
  • You usually don’t need to find alternative accommodation – you can move into your new home straight away, so you don’t need to find rental accommodation.
  • You may not need a bridging loan.
  • You can move out and in on the same day – unless there’s a long distance between the two properties.
Moving house

On settlement day the Seller will usually need to leave their property before midday.

The Buyer will then have the afternoon to move in. It may be worth considering packing up a truck the night before or storing your belongings overnight and staying with friends or family for the night.

You will not be able to pick up the keys for your new property until that settlement is completed, so there may be a waiting time before you can access the property and start unpacking.

Strathalbyn Conveyancing have experience with coordinating simultaneous settlements. If you are selling and buying on the same day, talk to us as soon as possible so we can assist you to achieve smooth settlements.