Buying and selling property at the same time can be one of the most stressful parts of the conveyancing process. Many homeowners rely on the proceeds from selling their existing property to fund the purchase of their next home, making careful coordination essential.
A simultaneous settlement occurs when the sale of your existing property and the purchase of your new property are completed on the same day. While this approach can provide significant practical and financial benefits, it also requires careful planning to ensure both transactions proceed smoothly.
This article explains how simultaneous settlements work, the risks involved and the important legal considerations when buying and selling property at the same time.
What Is a Simultaneous Settlement?
A simultaneous settlement is where two property transactions are linked together so that:
- your existing property is sold and settled; and
- your new property purchase is completed on the same day.
The funds received from your property sale are generally used towards completing the purchase of your new property, along with any required finance arrangements.
While simultaneous settlements are common in residential conveyancing, they require careful coordination between buyers, sellers, lenders, conveyancers and settlement platforms such as PEXA.
Why Complete a Simultaneous Settlement?
Many people choose a simultaneous settlement because they are not financially able to purchase a new property without first selling their existing home.
This approach is particularly common when a family is:
- upsizing to a larger property;
- downsizing after children leave home;
- relocating to another area; or
- moving due to lifestyle or employment changes.
Completing both transactions together can provide several practical benefits, including:
- Only moving once: reducing removalist, storage and moving costs.
- Avoiding temporary accommodation: eliminating the need to rent or stay with family or friends while waiting for another property.
- Simplified finance arrangements: allowing your existing loan to be discharged and replaced with finance for your new property.
- Easier service transfers: allowing utilities such as electricity, internet and other services to be disconnected and reconnected around the same moving date.
How Does a Simultaneous Settlement Work?
During a simultaneous settlement, the sale of your existing property and the purchase of your new property occur together. Because the transactions are connected, a delay or problem with one settlement can affect the other.
For example, if the purchaser of your existing property cannot settle on time, this may prevent you from completing your purchase and create a chain of settlement issues.
Before settlement day, your conveyancer or solicitor will coordinate matters including:
- reviewing and negotiating contracts;
- confirming settlement dates;
- communicating with lenders and other parties;
- arranging payment of settlement funds; and
- ensuring required documents are completed.
On settlement day, the funds from your sale are applied towards your purchase. Your existing mortgage is discharged and, where applicable, a new mortgage is registered over your new property.
Although settlement itself may only take a short time, the preparation and coordination often begins weeks or months beforehand.
Legal Considerations When Buying and Selling at the Same Time
A simultaneous settlement can provide convenience, but it also creates legal risks that need to be carefully managed.
Once contracts have been exchanged, the parties are legally committed to the transaction. If a purchaser fails to complete a purchase, there can be serious financial consequences, including the potential loss of the deposit and claims for damages.
For this reason, buyers should carefully consider whether their existing property sale is sufficiently secure before entering into an unconditional purchase contract.
Your conveyancer or property lawyer can assist by:
- reviewing your sale and purchase contracts;
- negotiating suitable settlement dates;
- advising on conditions that may protect your position; and
- coordinating communication between all parties.
Information about the property buying and selling process is also available through NSW Government property resources.
Can You Include a Subject to Sale Clause?
If you have not yet sold your existing property, your lawyer may be able to negotiate a subject to sale clause in your purchase contract.
This type of clause allows a buyer to make their purchase conditional on selling their existing property. However, many vendors are reluctant to accept these clauses, particularly in competitive property markets where other buyers may be prepared to enter unconditional contracts.
Should You Sell First or Buy First?
There is no single approach that suits every homeowner. The right option depends on your financial circumstances, property market conditions and personal priorities.
Selling First and Buying Later
Selling your existing property before purchasing another can provide greater financial certainty.
Advantages include:
- knowing exactly how much money is available for your next purchase;
- reducing the risk of managing two mortgages;
- having stronger negotiating power as a buyer with available funds.
The main disadvantage is that you may need temporary accommodation while searching for your next property.
In some circumstances, you may be able to negotiate a short-term leaseback arrangement with the buyer of your existing property, allowing you to remain in the home temporarily after settlement.
Buying First and Selling Later
Buying your next property before selling your existing home can allow you to secure a property you want without rushing.
However, this option can create financial pressure because you may need to:
- manage two mortgages;
- obtain bridging finance; or
- sell your existing property sooner than expected.
If your existing property does not sell quickly, you may be forced to accept an offer below your preferred price to reduce financial pressure.
Frequently Asked Questions About Simultaneous Settlements
Is a simultaneous settlement risky?
A simultaneous settlement can involve additional risks because two transactions depend on each other proceeding successfully. Careful planning and communication between all parties can help minimise these risks.
Can I buy a property before selling my current home?
Yes, but you should carefully consider your finance arrangements and whether you can manage the costs of owning two properties at the same time.
What happens if my property sale does not settle on time?
If your sale does not settle as planned, it may affect your ability to complete your purchase. Your lawyer can advise you on available options and negotiate with the relevant parties.
Planning Your Property Settlement
Buying and selling property at the same time requires careful planning, clear communication and an understanding of the legal and financial risks involved.
A simultaneous settlement can provide significant practical benefits, but it is important to have appropriate advice before committing to linked property transactions.
Our property and conveyancing lawyers can assist with reviewing contracts, negotiating settlement arrangements and guiding you through the buying and selling process.
If you are considering buying and selling property at the same time, contact our team to discuss your circumstances.
This article provides general information only and is not intended to be legal advice. You should obtain advice specific to your circumstances.