Buying and selling property at the same time can be one of the most stressful parts of moving house. Many homeowners rely on the proceeds from their sale to fund their next purchase.
This process is known as a simultaneous settlement. It requires careful planning, communication and coordination between buyers, sellers, lenders and legal representatives.
A property lawyer can help you understand your obligations and manage the legal risks involved in completing two property transactions at once.
Quick guide: Simultaneous settlements in NSW
| Question | Answer |
|---|---|
| What is a simultaneous settlement? | A simultaneous settlement occurs when you sell one property and purchase another property with both transactions completing on the same day. |
| Why do people use simultaneous settlements? | Many homeowners use this option to access sale proceeds and avoid temporary accommodation or extra moving costs. |
| What is the biggest risk? | If one transaction experiences delays or fails, the other transaction may also be affected. |
| Do I need a lawyer? | Yes. A lawyer can coordinate contracts, settlement requirements and potential risks. |
Why choose a simultaneous settlement?
Many people cannot purchase a new property without first selling their existing home. A simultaneous settlement allows the sale proceeds to contribute towards the new purchase.
This approach often suits people who are:
- upsizing to a larger home;
- downsizing after selling the family home;
- relocating to another area; or
- moving between properties without wanting a gap between transactions.
Completing both settlements together may provide several practical benefits, including:
- only moving once, which can reduce removalist and storage costs;
- avoiding temporary accommodation expenses;
- coordinating the refinance of an existing loan with the purchase of a new property; and
- arranging utility connections and disconnections at the same time.
How does a simultaneous settlement work?
A simultaneous settlement involves completing the sale of your current property and the purchase of your new property on the same day.
Because the two transactions rely on each other, everyone must carefully coordinate the process. A delay with one transaction can affect the other.
The circumstances of the other buyers and sellers may also affect your settlement. For example, if another party relies on their sale proceeds to complete their purchase, a delay can create a chain reaction.
What happens on settlement day?
On settlement day, your lawyer or conveyancer coordinates the transfer of funds and documents.
The process usually involves:
| Step | What happens |
|---|---|
| Sale proceeds received | Funds from your property sale are collected and used towards your purchase. |
| Existing loan discharged | Your lender releases the mortgage over your existing property. |
| New loan arranged | A new mortgage may be registered over your new property. |
| Property transferred | Ownership transfers to the new buyer and seller. |
The settlement itself may only take minutes, but the preparation usually begins weeks or months beforehand.
During this time, you will also need to organise practical matters such as moving arrangements, electricity, internet and other services.
What are the legal considerations of a simultaneous settlement?
A simultaneous settlement can provide practical benefits, but it also creates legal risks.
Once contracts exchange, both parties become legally committed to the transaction. If a buyer fails to complete the purchase, they may face serious financial consequences.
For example, a purchaser may lose their deposit if they cannot complete the contract. In NSW property transactions, deposits are commonly 10% of the purchase price.
You can find further information about NSW property transactions through NSW Government property resources.
How can you protect yourself during a simultaneous settlement?
If you plan to buy and sell property at the same time, your lawyer can help reduce risks by:
- coordinating both transactions;
- ensuring both contracts include suitable settlement dates;
- negotiating appropriate contract conditions; and
- reviewing possible risks before you commit.
Ideally, both contracts should provide for the same completion date. This reduces the risk of completing one transaction without the funds or property required for the other.
Can you buy a property subject to selling your current home?
Another option is negotiating a “subject to sale” clause in your purchase contract.
This clause allows you to make your purchase conditional on selling your existing property.
However, sellers often reject these clauses, especially in competitive markets. Many vendors prefer unconditional offers from buyers who can proceed immediately.
What are your options when buying and selling property?
| Option | Advantages | Potential risks |
|---|---|---|
| Sell first, buy later | Reduces financial pressure and provides certainty about available funds. | You may need temporary accommodation while searching for your next property. |
| Buy first, sell later | Allows you to secure your preferred property before selling. | You may need to manage two mortgages or obtain bridging finance. |
| Simultaneous settlement | Allows you to coordinate your sale and purchase together. | A delay in one transaction can affect the other. |
Selling first and buying later
Selling your existing property before purchasing another can provide greater financial certainty.
This option may suit people with less equity or those who want to avoid managing two properties at once.
The downside is that you may need temporary accommodation while searching for your next home.
If your buyer does not need immediate possession, you may be able to negotiate a leaseback arrangement. This allows you to remain in the property for an agreed period after settlement.
If you need to relocate quickly, renting out your existing property on a short-term basis may also be an option.
Buying first and selling later
Buying before selling allows you to secure your preferred property immediately.
However, this option can create financial pressure. Unless you own your existing property outright, you may need to manage two loans or obtain bridging finance.
If selling your existing property takes longer than expected, your financial commitments may increase.
Frequently asked questions about simultaneous settlements
How long does a simultaneous settlement take?
The settlement process itself usually takes a short time on settlement day. However, preparation and coordination can take several weeks or months.
What happens if my property sale falls through before settlement?
If your purchase depends on your sale completing, a failed sale may create significant problems. Your lawyer can advise you about your options.
Can I complete a simultaneous settlement without a lawyer?
While some people choose to use conveyancers, legal advice can help identify risks and protect your interests during complex transactions.
Conclusion: Is a simultaneous settlement right for you?
There is no single solution that suits every property transaction.
Your financial position, property market conditions and personal circumstances will determine the best approach.
A simultaneous settlement can simplify the moving process, but it requires careful planning and a backup plan if something goes wrong.
If you are buying and selling property at the same time, obtaining legal advice early can help you understand your risks and obligations.
If you or someone you know wants more information or needs help or advice, please contact us on (02) 9818 2888 or email [email protected].