Possession before settlement

By Reporter 30 November 1999 | 1 minute read

Many buyers opt to move into a home before settlement formerly takes place, but is it a wise thing to do?

pen signing settlement contract possession property investment

As you inspect a home that could soon be yours, you may notice a few things you’d like to change.

Perhaps you detest the shagpile carpet and have plans to rip it up to showcase the beautiful rosewood timber floorboards beneath.

Or maybe the place needs a good lick of paint, and you’d like to get cracking before you ship in your furniture and belongings.

In these instances, it’s not uncommon to ask the seller if you can have possession of the property before settlement, so you can get a head start on giving the place a spruce up.


Possession enables you to legally enter the premises, subject to the terms and conditions of the agreed sale contract.

That purpose may be to carry out renovations, repairs, or even to have a place to stay between signing the contract and settlement – great if you’re temporarily homeless and balking at the idea of renting somewhere new or moving back in with your folks.

Possession can be beneficial for the seller too. By allowing you to enter the premises before settlement, the seller can receive a financial benefit.

But one point needs to be clearly noted, and that is possession is not ownership.

Therefore, complications can arise where the buyer invests too much into a property they do not own, or when something happens to the property while the buyer is in occupation.

In those cases, it is essentially to have buyer protection.

It’s in the contract The sale contract should contain a section with specially devised, non-standard conditions that set out the terms of the possession or occupancy.

This should be negotiated and drafted carefully – preferably by a lawyer – and include points like who will take possession (if not the buyer themselves but an agent, contractor or representative), for how long, for what purpose, and for what benefit.

Double up on cover The other thing you should think about is taking out your own insurance over the property. You should do this even if you’re not talking possession before settlement – it’s just a prudent consideration.

And while some may think this is doubling up on insurance – two policies are better than none.

A number of things can go awry between signing and settlement, and you can’t necessarily rely on the seller’s insurance cover.

Talk to your lawyer about why you want to take possession, and what you want to achieve during that time. Also ask your lawyer to explain how things like disputes will be resolved and how money will be adjusted on settlement.

And be mindful that until settlement actually occurs, you are a merely guest on the property – not the owner – and treat the property with respect, keeping it in materially the same condition as on first inspection.

Possession before settlement
pen signing settlement contract possession property investment
spi logo

Get the latest news & updates

Join a community of over 100,000 property investors.

Check this box to receive podcast updates

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.