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Settlement day: fund flow, PEXA, and why it sometimes fails

Settlement day is where the contract becomes ownership. In 2026, almost all Australian settlements run through PEXA (Property Exchange Australia), the electronic lodgement system that replaced paper settlement in most jurisdictions. Understanding the fund flow helps you know what to do - and what not to do - on the day.

The PEXA workflow

At least 48 hours before settlement, your solicitor lodges the documents in PEXA. The bank lodges its mortgage. The vendor’s solicitor lodges the transfer and discharge of mortgage. All parties agree to a settlement time, usually between 11am and 3pm.

At settlement time, PEXA orchestrates the simultaneous transfer:

  • Your lender releases the loan funds
  • Your own equity contribution settles from your cheque or deposit held in trust
  • Vendor’s lender receives their loan payout
  • Vendor receives the net proceeds
  • Title registers in your name
  • Mortgage registers in your lender’s name

All of this happens in a 15-30 minute window. If anything fails, settlement is rescheduled - usually to the next business day.

What fails most often

1. Insufficient cleared funds: Your equity contribution must be in your solicitor’s trust account in cleared form 24-48 hours before settlement. Transfers initiated late, or via PayID daily limits, routinely cause delays.

2. Lender documentation: The lender needs completed mortgage documents signed by every borrower. Missing signatures or unsigned pages delay the lender’s PEXA lodgement.

3. Incorrect settlement figures: Late adjustments (rates, water, insurance, rent) require recalculation. If the vendor’s solicitor hasn’t provided updated figures, the PEXA workspace rejects.

4. PEXA outages: Rare but notable. PEXA maintenance windows or outages can delay settlement. Most contracts have clauses that accommodate PEXA technical failures without penalty.

Costs at settlement you will see

  • Stamp duty: paid via the electronic portal at lodgement, included in settlement figures
  • Registration fees: $130-$200 depending on state
  • Discharge fee (if refinancing): $300-$400
  • Legal/conveyancer fees: $1,500-$2,500
  • Pro-rata adjustments: rates, water, body corporate levies

What you need to do on the day

Very little. Your solicitor handles PEXA. You need to:

  • Be contactable by phone from about 10am
  • Confirm when settlement has completed (usually an email from the solicitor)
  • Collect the keys from the real estate agent once settlement confirms
  • Do a final walkthrough if you didn’t do the pre-settlement inspection

When settlement fails and what it costs

If settlement misses the agreed date due to your delay, you typically pay penalty interest on the purchase price at the rate specified in the contract (often 9-12% p.a.). On a $800k purchase, that is $200-$260 per day. If the vendor’s delay causes the miss, they usually pay you. Disputes about which party caused the delay can spiral; documenting each party’s readiness matters.

Plan for settlement to take the full day, even though the actual exchange takes 30 minutes.