Updated 4 November 2026
What Property Buyers Need to Know About the Contract for Sale #8: What are the financial obligations at settlement?
A NSW property buyer needs more than the deposit and an approved loan to complete a purchase. The settlement budget must cover the remaining price, taxes, adjustments and transaction costs. Establish the amount of cleared funds required early, then reconcile the final figures with your solicitor or conveyancer and lender before completion.
What must a buyer budget for at settlement?
Budget for the unpaid purchase price, transfer duty, legal and registration charges, lender costs and the adjustments required by the contract. Some expenses are paid earlier, while others are paid through settlement. Your cash contribution depends on the final amount due and the loan funds actually available for completion.
The NSW Government’s buying-cost guide also identifies inspection, insurance and ongoing ownership expenses. Keep moving costs, utility connections and an appropriate cash buffer separate from money committed to settlement, so paying the purchase price does not leave necessary expenses unfunded.
How is the balance of the purchase price calculated?
Start with the agreed price and deduct the deposit already paid and credited under the contract. Add or subtract the settlement adjustments, then include other amounts payable through settlement. Confirm the deposit holder and release arrangements; the full purchase balance is not necessarily held in your solicitor’s trust account beforehand.
For illustration only, a $900,000 price less a $90,000 deposit leaves $810,000 before adjustments and costs. If the lender contributes $720,000, the buyer needs $90,000 plus those additional amounts. This arithmetic example is not a duty assessment, borrowing estimate or actual case.
Does loan approval mean enough money will be available?
Loan approval alone does not establish the amount available for settlement or that all funding conditions have been met. Confirm the lender’s actual contribution after deductions, outstanding documents and any required personal contribution. A shortfall must be funded in time; it does not automatically excuse non-completion under the sale contract.
ASIC MoneySmart explains that pre-approval does not guarantee a loan. Ask your lender and conveyancer to reconcile the approved amount with the settlement advance. Identify dependence on another sale, overseas funds or a family contribution early, including the timing and evidence required.
When must NSW transfer duty be paid?
Transfer duty is generally due within three months of the contract date, or by settlement if that occurs earlier. It is calculated using the higher of the purchase price and market value, subject to applicable rules. Do not assume duty is a fixed percentage or can always wait until completion.
Use Revenue NSW’s current guidance and calculator. Eligible first-home buyers may receive an exemption or concession, and qualifying owner-occupier off-the-plan purchases may allow deferred payment. Have eligibility confirmed before reducing your budget; foreign purchaser surcharge duty may also require separate consideration.
What lender fees and mortgage insurance should be checked?
Ask the lender for a written breakdown of application, valuation, settlement and other loan charges. Lenders mortgage insurance may apply to borrowing above eighty per cent of the property’s value, depending on the product and eligibility. It protects the lender, and may be paid upfront or added to the loan.
MoneySmart’s deposit guidance explains the distinction between your deposit and the loan-to-value ratio. Confirm whether fees or insurance reduce the cash advanced, increase the debt or require a separate payment. Avoid budgeting twice for a charge already included in the lender’s settlement figure.
Are legal and registration fees all included in one quote?
Check the written costs disclosure rather than assuming every expense is included in the professional fee. Searches, certificates, electronic settlement and registration may be separate disbursements. Standard NSW transfer registration charges are scheduled fees for the dealing, not a percentage of the property’s value; mortgage registration can add another charge.
The NSW conveyancing guide recommends an itemised estimate. Ask whether GST is included and what work could attract additional fees. Confirm the current registration and platform charges for your transaction, including any extra dealings, instead of relying on an old online price range.
How do council rates, water and strata adjustments work?
The settlement statement apportions relevant outgoings between buyer and seller according to the contract and current information. A buyer may reimburse prepaid charges or receive an allowance for amounts remaining unpaid. Check the period, calculation date and treatment of arrears instead of assuming every expense is simply divided in half.
For strata property, review the section 184 certificate and financial records. Ordinary levies, arrears and special levies need separate attention. Who bears a special levy can depend on the contract and its timing; obtain advice before accepting an unexpected adjustment or agreeing to pay it.
Is the seller’s land tax automatically apportioned?
No. In NSW, the contract determines whether and how land tax is adjusted between the parties. An adjustment is separate from checking whether unpaid land tax charges affect the property. Your own intended use of the home does not necessarily remove a contractual adjustment for the seller’s land tax.
Revenue NSW explains land tax clearance and the importance of reviewing adjustment clauses before signing. Obtain appropriate clearance information and ensure outstanding charges are addressed. A clear certificate and an agreed reimbursement are different matters; ask your representative to explain both in the settlement statement.
Who pays to discharge the seller’s mortgage?
The seller normally arranges repayment of their secured loan and discharge of the mortgage being removed at settlement. This is commonly funded from the sale proceeds. The buyer’s representative and lender should check the discharge arrangements; the buyer should not assume that paying the price automatically removes every registered interest.
A discharge payout may change with interest, fees and the settlement date. Other title interests, including easements, may remain after purchase. Check the title and contractual position, and distinguish the seller’s mortgage payout from the buyer’s new loan and registration expenses.
Could some purchase money need to be paid to the ATO?
Yes. Foreign resident capital gains withholding and GST withholding can affect settlement payments. For relevant Australian property contracts entered into from 1 January 2025, the former price threshold for foreign resident withholding was removed and the rate became fifteen per cent. Check clearance certificates, variations and any applicable exceptions before directing funds.
Australian resident sellers generally need valid ATO clearance certificates to avoid foreign resident withholding. Certain purchases of new residential premises or potential residential land also require GST withholding. These are separate regimes: check the seller’s notice and required buyer forms. Withholding generally redirects part of the price to the ATO rather than adding the same amount to it.
When should insurance and other ownership costs be arranged?
Arrange appropriate insurance before the date cover is required by your contract, lender and circumstances. For NSW purchases, settlement or earlier possession is an important point to check, and earlier cover may be appropriate. Strata building insurance does not necessarily cover your contents or every risk affecting your individual lot.
The NSW Law Handbook discusses insurance timing. Confirm the lender’s evidence requirements and, for strata, the building policy. Budget separately for moving, utilities, maintenance and ongoing levies. These expenses may fall outside the settlement statement but still affect the cash you need.
How should the buyer’s contribution reach settlement?
Follow verified instructions from your solicitor or conveyancer about the amount, account and deadline for cleared funds. Check transfer limits and processing times before the day of completion. Electronic settlement requires the financial arrangements and documents to be ready; initiating a bank transfer is not the same as making usable funds available.
Scamwatch warns about payment redirection. Verify account details using an independently sourced phone number, particularly after any change. Do not rely solely on an email reply or familiar-looking message thread. Retain payment evidence and confirm receipt through the agreed channel.
What happens if the buyer cannot settle on time?
Late completion can expose a buyer to contractual interest, additional costs and, where the legal requirements are met, termination, deposit loss or damages. The result depends on the contract, notices and circumstances. A seller does not automatically acquire every remedy for every delay, and the buyer should obtain urgent advice.
Raise any funding problem immediately. Seek a written extension addressing the new date, interest and other conditions; an extension is not guaranteed. Have any notice to complete or termination reviewed promptly. Do not assume a bank delay will make an essential completion deadline unenforceable.
What does the real Tanwar case show about late funds?
In Tanwar Enterprises Pty Limited v Cauchi [2003] HCA 57, a purchaser of three NSW development sites missed an expressly essential completion deadline because overseas funds arrived the following day. The High Court dismissed its appeal against the refusal of relief, leaving the vendors’ termination effective. One day’s delay did not secure another opportunity to complete.
The parties had agreed to completion by 4 pm on 25 June 2001 after earlier extensions. On 7 October 2003, the High Court dismissed the appeal with costs. This commercial transaction concerned essential terms and equitable relief; it does not establish automatic forfeiture of every payment whenever settlement is late.
What is our practical recommendation before settlement?
Ask for a written settlement statement showing the price balance, adjustments, taxes, fees, lender contribution and your remaining cash requirement. Reconcile it with amounts already paid and confirm when cleared funds must arrive. Our recommendation is to resolve discrepancies before settlement day and retain a realistic buffer for identified uncertainties.
For buying-property advice or a contract review, contact Christine Manolakos and CM Lawyers on (02) 9557 9000 or lawyers@cmlaw.com.au. Send the contract, settlement date and finance details so we can assess the obligations and timing for your purchase.
This article provides general information about NSW property settlement. Obtain advice about your contract, finance, tax position and proposed transaction before acting.
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