Finance + Settlement: the gates between exchange and keys

What changes after exchange

Once the contract is signed and exchanged (NSW + WA + ACT) or signed and the cooling-off window opens (VIC + QLD + SA + TAS), the buyer's attention shifts from selection-and-pricing to procedural-and-time-management. Six gates remain:

1. Cooling-off period (state-specific; not applicable to auction purchases). 2. Building-and-pest condition clearance (typically 7-14 days). 3. Finance condition clearance (typically 21-28 days). 4. Strata satisfaction for strata-titled properties (typically 14 days). 5. Pre-settlement inspection (24-48 hours before settlement). 6. Formal settlement (4-12 weeks after exchange, depending on the contract).

Each gate has a deadline, an off-ramp, and a default consequence if the gate isn't met. The Steward, propautopilot's settlement-desk specialist, runs the buyer through them in sequence.

Gate 1: Cooling-off period

Cooling-off lets the buyer rescind the contract within a fixed window after exchange, usually for a small forfeit (typically 0.25% of the purchase price). State-specific:

• NSW: 5 business days. Forfeit: 0.25% of the price (the cooling-off fee). Auction purchases exempt. Section 66W certificate waives cooling-off.
• VIC: 3 business days. Forfeit: 0.2%. Auction purchases exempt. Cooling-off doesn't apply if the buyer received independent legal advice and signed a section-31-waiver, or if the property sold within 3 days of an auction.
• QLD: 5 business days. Forfeit: 0.25%. Auction purchases exempt.
• WA: no statutory cooling-off (unusual among AU states).
• SA: 2 business days. Forfeit: nominal. Auction purchases exempt.
• TAS: no statutory cooling-off.
• ACT: 5 business days. Forfeit: 0.25%. Auction purchases exempt.

What cooling-off is for: it's the buyer's last off-ramp if Step 5's inspection sequence surfaces something material in the days immediately after exchange. It's not a "change my mind" provision; using it for cold feet costs the cooling-off fee plus (in practice) the seller's mistrust if the buyer comes back later.

Gate 2: Building-and-pest condition

If the contract was signed subject to building-and-pest clearance (the standard private-treaty condition from Chapter 8), the inspection runs in the first 7-14 days post-exchange. If Step 5's pre-offer inspection was already clean, this is mostly procedural. The same report covers both.

If the post-exchange building-and-pest surfaces a material defect that wasn't in the pre-offer inspection (rare, but possible, most often where the pre-offer inspection was visual-only and the post-exchange inspection includes destructive testing), the buyer has three options:

• Negotiate cost-to-cure with the vendor. Standard outcome: vendor adjusts price by the defect cure cost.
• Walk away under the building-and-pest condition. Allowed if the defect is "major" per the report; not allowed for cosmetic defects. Recovers the deposit.
• Accept and absorb. The buyer pays the cure cost themselves. Rare and usually a mistake.

The conveyancer drafts the negotiation letter or the rescission notice depending on the choice.

Gate 3: Finance condition

The buyer's lender turns the conditional pre-approval (which the buyer obtained pre-offer per Chapter 2) into unconditional approval. The lender re-runs the serviceability assessment against the actual property and the actual contract terms.

Common reasons the unconditional approval doesn't come through cleanly:

• Valuation came in below contract price. The lender's valuer assessed the property below what the buyer paid. Lender will offer a smaller loan; the buyer has to top up the deposit or rescind.
• Borrower's circumstances changed since pre-approval. New job, new dependent, new debt. APRA buffer math changes.
• Property type doesn't fit lender's policy. Some lenders cap LVR on small-floor-area apartments (under 50 sqm), serviced apartments, certain post-codes. Lender may decline outright.
• Strata risk on units. Lender's strata search surfaces a special-levy or building-defect claim that fails the lender's policy.

If the lender doesn't approve at the contracted amount, the buyer's options are: top up the deposit, find another lender (typically 14-21 days for a fresh approval), or rescind under the finance condition. The conveyancer manages the rescission.

Gate 4: Strata satisfaction (strata-titled properties only)

If the contract was signed subject to strata satisfaction, the buyer has typically 14 days post-exchange to confirm the strata report is acceptable. The strata search ordered pre-offer (Chapter 7) is usually the same report.

Key strata flags that justify rescission:

• Sinking fund under 5% of replacement cost.
• Pending capital works over 10% of unit value.
• Active building-defect claim against the developer (common in 5-10-year-old buildings).
• Insurance gap (building-only when full strata cover required).

Negotiation rarely works on strata flags. The body corporate's structure is fixed. Rescind or accept.

Gate 5: Pre-settlement inspection

24-48 hours before formal settlement, the buyer (or the conveyancer) walks the property to confirm:

• The property is in the same condition as at exchange.
• Inclusions are still present (built-in dishwasher, light fittings, shed, fixed garden equipment).
• The seller has cleared their belongings.
• No new damage (recent storm, removalist damage, vacated-tenant damage).

If the inspection flags new damage or missing inclusions, the buyer can request settlement be delayed, the seller make the property right, and adjust on settlement statement. Standard practice; the conveyancer handles.

Gate 6: Formal settlement

The conveyancer plus lender plus vendor's representative complete the transfer. The buyer's mortgage funds the balance; stamp duty is paid; title transfer registered with the state titles office.

Common day-of-settlement issues:

• Settlement-statement discrepancy. Council rates, water, and body-corporate adjusted at the wrong day. Conveyancer corrects.
• Lender's funds late. Settlement is rescheduled (typically same-day or next-business-day). Penalty clauses in the contract apply.
• Title-search anomaly. Last-minute caveat or registered interest. Conveyancer urgently resolves before settlement can complete.

The conveyancer's job is to anticipate all three. Engage a conveyancer the buyer trusts. This is not where to economise.

After settlement: three immediate actions

1. Insurance from settlement minute. Building insurance must be effective from the moment of settlement, not from the buyer moving in. Some policies don't auto-activate; verify with the broker. 2. Tenancy + property-management setup (for investment properties). If the property is tenanted, the existing lease transfers; if vacant, the property manager lists for tenants. Set up the trust account plus rental-income agreement before settlement so it's ready. 3. Council rates + water + body-corporate transferred into the buyer's name. Conveyancer triggers the notices automatically; verify they arrived within 14 days.

Common mistakes at Chapter 10

• Treating cooling-off as a "change my mind" right. It's the post-exchange equivalent of the Chapter 7 off-ramp. Use it if Step 5 missed something, not if the buyer got cold feet.
• Skipping the pre-settlement inspection. 1 in 12 settlements has an inclusion or damage issue that the inspection catches. Cost to skip: whatever the inclusion or damage is worth.
• Letting the lender's valuation come in low without acting. A low valuation isn't the end. The buyer can challenge the valuer (rarely successful), top up the deposit, or find another lender. Doing nothing is the wrong move.
• Engaging a discount conveyancer for an investment purchase. A A$200 saving on the conveyancing fee is the wrong saving. Settlement-day issues cost orders of magnitude more if the conveyancer doesn't catch them.
• Forgetting building insurance starts at settlement. A property insurable gap between contract-exchange and the buyer moving in is a real risk if a storm hits. Verify policy is effective from the moment of settlement.

Now do this on your scenario: generate your settlement checklist

The propautopilot settlement-checklist tool generates a printable per-state checklist with cooling-off rule, building-and-pest deadline, finance-condition deadline, pre-settlement-inspection timing, and the post-settlement insurance plus tenancy actions. Free.