Can You Move Into a House Before Settlement?

Moving into a new home is an exciting milestone, but the process can be complex, especially when it comes to the legal aspects and timing of the move. One question that often arises is whether you can move into a house before settlement. In this blog post, we'll explore the legal aspects, risks, consequences, process, and requirements of moving into a property prior to settlement in Melbourne, Victoria, Australia.

Legal Aspects In the past, it was more common for buyers to receive the keys and move into a property days or even weeks before settlement. However, this practice has become less frequent in recent years. The legal transfer of property ownership from the seller to the buyer occurs on the settlement day, which is when the buyer becomes the official owner.

Unless the contract of sale includes a special condition allowing early access, the seller is not obligated to permit the buyer to move in before settlement. If the buyer wishes to negotiate early possession, it's recommended to seek legal advice and have a solicitor handle the request formally to ensure all parties understand their rights and obligations.

Risks and Consequences Moving into a house before settlement comes with risks for both the buyer and the seller. Some potential disadvantages for the seller include:

Legal title does not pass to the buyer until settlement is completed
The seller won't receive settlement funds until formal settlement
The sale could be delayed or fall through, leaving the seller in a difficult position
If settlement doesn't occur or a dispute arises, removing the buyer from the property may be costly and require legal action

For the buyer, the risks of moving in early include:

If the closing doesn't happen as planned, the buyer may have to move out and find alternative accommodation
Issues with title or financing could leave the buyer in a challenging situation
The buyer may be responsible for rates and utilities from the date of possession
Early possession doesn't entitle the buyer to make alterations to the property
If the property is damaged, the buyer must still proceed with settlement
The seller may charge the buyer a fee for the time spent on the property before settlement

Process and Requirements If the buyer and seller agree to early possession, it's crucial to have a written agreement in place, typically called a Licence Agreement. This agreement should outline the conditions of early possession, such as:

The buyer accepts the Property 'as is' meaning in its current condition.
Possession is under a licence and doesn't create a landlord-tenant relationship
The buyer indemnifies the seller against damages or expenses incurred due to early possession
The buyer must maintain the property "as is" meaning in its current condition from the date of possession (fair wear and tear excepted)
The property must be insured to the seller's satisfaction

Other considerations for early possession include:

Both parties should fully understand their obligations and responsibilities
The seller should maintain their insurance, as they still own the property
Utilities should be transferred to the buyer's name
The buyer should agree to maintain the property in its current condition

Alternatives to Early Possession If moving in before settlement isn't possible or desirable, there are alternatives to consider:

Negotiate a rent-back agreement: The seller remains in the house for a specified period after settlement and pays rent to the buyer.
Find temporary housing: Stay with family or friends, or rent a short-term apartment or house until settlement is completed.

Checklist for Moving In Once settlement has taken place and you're ready to move into your new home, there are several tasks to complete to ensure a smooth transition:

Before moving in:

Arrange home and contents insurance
Book removalists or enlist friends and family to help with the move
Change your address with relevant organisations (banks, utilities, local council, etc.)
Cancel or transfer existing services (internet, phone, etc.)
Arrange for utilities to be connected at your new address

On move-in day:

Conduct a final walk-through to check for any damage or issues
Clean the house thoroughly or hire a professional cleaning service
Prioritise unpacking essentials for each room (bedroom, bathroom, kitchen)
Set up your home office with necessary supplies and equipment
Ensure your laundry room is functional with a washer, dryer, and other essentials
If you have an outdoor area, equip it with furniture, lighting, and storage solutions

Conclusion

Moving into a house before settlement is possible in Melbourne, Victoria, but it depends on the agreement between the buyer and seller. There are risks and potential consequences for both parties, so it's essential to have a formal written agreement and seek legal advice.

If early possession isn't feasible, consider alternative arrangements like a rent-back agreement or temporary housing. Once settlement is complete, follow a checklist to ensure a smooth move-in process and create a comfortable, functional home.

Remember, every situation is unique, and it's essential to consult with legal and real estate professionals to make informed decisions based on your specific circumstances. For expert advice on conveyancing matters in Melbourne, contact Pearson Chambers Conveyancing on 03 9969 2405 or email contact@pearsonchambers.com.au to discuss your situation and receive a free Section 32 contract review.