The Hidden Dangers of Long Settlements in Victoria

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By David Dawn, Licensed Conveyancer – Victorian Property Settlements

Long settlements are often seen as a win-win — more time to prepare, move, or finalise finance. But what many buyers and sellers in Victoria don’t realise is that extended settlement periods can carry hidden risks that may derail the deal or cause significant stress and cost. Whether you're a first-home buyer, investor, or downsizer, it’s essential to understand the traps that can come with a longer-than-usual contract timeline.

At Victorian Property Settlements, we regularly see cases where long settlements — 90, 120 or even 180 days — lead to preventable issues. This guide breaks down the key risks and what you can do to protect yourself.

1. Changing Market Conditions – Risk of Buyer’s Remorse or Seller Loss

When a property market is volatile — as it has been in recent years — the longer the settlement, the greater the exposure to market movement.

  • For buyers, a price drop between signing and settlement can lead to buyer’s remorse. Some try to renegotiate, delay, or default altogether.

  • For sellers, a sudden market rise may make the original sale price look undervalued, prompting regret and a lack of cooperation.

🔍 Real scenario: A purchaser signed a contract during a property boom with a 120-day settlement. When the RBA increased interest rates twice during that window, comparable property prices dropped — and the buyer attempted to pull out.

2. Lending Approval May Expire

Bank pre-approvals usually last 60 to 90 days. If a settlement extends beyond that, the buyer may be required to reapply — at potentially worse borrowing conditions.

Even if the buyer's situation hasn’t changed, the bank’s lending policies might have. Tighter serviceability assessments or changed LVR ratios can derail finance plans late in the process.

📌 Tip for buyers: Always check how long your pre-approval is valid and whether the loan remains available unconditionally through to settlement.

3. Insurance and Risk of Property Damage

In Victoria, the vendor carries the risk of the property until settlement. But when months pass between signing and handover, more things can go wrong:

  • Storm or fire damage

  • Vandalism

  • Appliance failure

  • Neglected maintenance

Buyers may also incorrectly assume that the property is “locked in” from contract date and neglect to check its condition again — only to discover issues at the final inspection.

✅ Pro tip: We always recommend a special condition requiring the property to be handed over in a clean and tenantable condition, with all services connected and working at final inspection.

4. Delay Tactics and Buyer Cold Feet

Long settlements provide more time for personal circumstances to change:

  • Employment loss

  • Relationship breakdown

  • Changed investment strategy

Buyers who get cold feet often look for ways to delay, renegotiate, or abandon the contract. Sellers then face uncertainty and may incur holding costs, cancellation penalties, or resale losses.

5. Deposit Release Can Become a Minefield

With longer settlements, sellers often want early access to the deposit — via a Section 27 statement — to help with bridging finance or moving costs.

But buyers may withhold consent if:

  • Their finance isn’t yet unconditionally approved

  • There are concerns about vendor ownership or mortgage position

  • They are advised that release isn't in their best interest

In some cases, disputes over early release drag on for weeks — all while the funds sit idle.

6. Vendors May Make Changes to the Property

With time on their hands, some vendors try to “improve” the property — but these changes can create legal headaches:

  • Non-compliant renovations

  • Appliance swaps or removals

  • Changes to fencing, gardens, or structural features

All of this can create disputes if the buyer believes the property is no longer in the same condition as when first inspected.

7. Building and Pest Reports May 'Go Stale'

When reports are done early in a long settlement, they may be outdated by the time the buyer gets the keys. Issues like termite activity, leaks, or structural shifts can develop during that time.

This also applies to certificates such as:

  • Council rates notices

  • Water usage estimates

  • Owners Corporation certificates

All of these should be updated before settlement — especially if they’re more than 60 days old.

✅ How to Protect Yourself During a Long Settlement

If a long settlement is unavoidable, here’s what buyers and sellers should consider adding to the contract:

  • ✔️ Finance clause extension rights: Allow for reapproval if beyond 60–90 days

  • ✔️ Updated certificate clause: Seller to provide refreshed council, water, and OC certificates before settlement

  • ✔️ Clean and tenantable condition clause: Property must be clean and all services working at final inspection

  • ✔️ Access clause: Buyer to have access for final inspection no more than 3 days before settlement

  • ✔️ Insurance clause: Confirmation of vendor’s coverage until handover

  • ✔️ No unauthorised works: Vendor prohibited from altering property without buyer consent

And finally — avoid settling on a Friday. If something goes wrong, your only fix is the following week.

💬 Need Help? We’re Here.

Long settlements are sometimes necessary — but only when carefully managed.

At Victorian Property Settlements, we advise clients through all stages of the process to ensure you don’t fall into common traps. Whether you're negotiating terms, reviewing a contract, or preparing for settlement, we’ll make sure your interests are protected.

📞 Call us on (03) 9783 0111
🌐 Visit: www.victorianpropertysettlements.com.au