What is a Simultaneous Settlement?
A standard simultaneous settlement occurs when a person is both selling one property and purchasing another, with both transactions scheduled to settle on the same day. The proceeds from the sale are used to fund the purchase. These settlements are linked through PEXA to enable the transactions to occur simultaneously. Funds from the sale are released directly via PEXA and applied toward the purchase.
Other types of simultaneous settlement
- A sale/purchase linked with a refinance
- A sale/purchase linked with a security swap
- Multiple linked transactions (e.g. refinance with additional security or security swaps, or the other parties also having a simultaneous settlement)
What is PEXA?
PEXA (Property Exchange Australia) is a digital platform used to complete property settlements electronically. Almost all electronic property settlements in Australia are processed through PEXA. The parties involved in a transaction operate within a shared digital workspace, where they input settlement details and payment instructions. Documents are digitally signed and submitted to the relevant land titles office to complete the transfer of ownership.
How to settle simultaneous settlements on PEXA
Simultaneous settlements can only be linked in PEXA if all properties are located within the same state or if the conveyancer/lender linking the settlements has jurisdiction in different states. Conveyancers can follow detailed instructions on how to link settlements via PEXA here.
Settlements that cannot occur simultaneously in PEXA:
- Properties located in different states and your conveyancer’s PEXA subscription does not have jurisdiction in both states
- Transactions involving interest-only titles
- Dealings that cannot settle electronically (e.g. some deceased estate transfers, water access licences, etc.)
Why Choose a Simultaneous Settlement?
Simultaneous settlements allow you to immediately apply the proceeds from your sale or refinance to your new purchase. This saves time and reduces the need to manage multiple separate transactions. It also enables you to move out of one property and into another on the same day—potentially avoiding temporary accommodation or storage costs.
Key Considerations for a Successful Simultaneous Settlement
1. Understand your finance
If your purchase is entirely funded by the proceeds of your sale, keep in mind that the deposit is usually held in the real estate agent’s trust account and will only be released after settlement. If you need access to those funds earlier, let your conveyancer know as soon as possible so arrangements can be made with the agent’s office.
If you are also using a lender to fund part of the purchase, ensure you confirm early whether an offset account has been set up for any potential shortfall. If no offset account authority is in place, your conveyancer may need to arrange for additional funds to be transferred into their trust account ahead of time.
2. Plan your moving day carefully
Since both transactions settle on the same day, the property you’re selling must be vacated before the settlement time. You also won’t be able to move into your new property until the purchase settlement is completed.
This can be logistically challenging. If you’re concerned about coordinating the move, you may wish to seek early access to the property you’re buying. Speak to your conveyancer early to explore the possibility of a licence agreement with the vendor. If early access isn’t possible, consider arranging temporary storage and accommodation in advance.
3. Keep all stakeholders informed
A successful simultaneous settlement requires coordination between various parties: your conveyancer, broker or lender, real estate agent, and possibly more. Ensure everyone is updated on your arrangements—such as refinancing plans, moving logistics, or special instructions—so that all necessary documents and approvals can be prepared in advance.
What Can Go Wrong?
Sometimes things do go wrong, common issues that would happen are generally due to insufficient funds, one party not meeting settlement deadline, and other factors that may cause a delay in settlement (read here).
1. Insufficient funds on settlement day
If your current property has a mortgage, note that lenders often provide the final payout figure only the day before or even the morning of settlement. If the payout amount is higher than expected, it could result in a shortfall. Transferring funds at the last minute can be risky, as they may not clear in time. To avoid this, discuss the possibility of a shortfall with your conveyancer and arrange any extra funds ahead of time.
2. A party fails to meet the settlement deadline
Each simultaneous settlement involves multiple parties—your buyer, your seller, and possibly several banks. If any party misses the deadline, both transactions can fail.
This could lead to a range of complications including:
- Rescheduling settlements with all involved parties
- Cancellation and rescheduling fees
- Legal costs
- Removalist or storage fees
- Potential breach of contract, default penalties, or even rescission
Due to these risks, we generally do not recommend simultaneous settlements, even though they offer convenience by aligning both transactions on the same day.
How to Mitigate Your Risk
1. Draft special conditions
If the other party defaults, your ability to recover costs is limited unless specific contractual protections are in place. It’s crucial to include special conditions in the contract that define foreseeable losses (e.g. removalist costs, penalty interest, storage, etc.) and allow for cost recovery in the event of a failed settlement.
2. Make moving arrangements early
A licence agreement that grants early access to your new property can make moving easier and avoid same-day chaos. This often involves a small fee or weekly rent payable to the vendor—but the convenience can be well worth it.
3. Understanding lender’s hours of operation and settlement cut off times
Different lenders have varying hours of operation and cut-off times for certain tasks (such as sourcing shortfall funds or returning discharge/loan documents). Make sure you understand these timelines to avoid any last-minute stress.
How We Can Help
At Provey, we’ve successfully facilitated many simultaneous settlements. Our experience means we can anticipate issues early, communicate effectively with all parties, and plan ahead to reduce your stress.
With the right support and preparation, your simultaneous settlement can be a smooth and successful process.