Vendor and Buyer Rights and Risk Between Signing and Settlement

Vendor rights, buyer protections and risk: what happens between signing and settlement in Victoria

You have found the right property and signed a Contract of Sale. The deposit is paid, dates are set, and it feels like the hard part is over. In Victoria, though, the most important risk management happens after signing and before settlement.

This period is where conditions are satisfied, documents are checked, lenders are coordinated and practical issues can arise. Understanding who can terminate and when, who bears the risk of loss, and what to do if something goes wrong will help you move to settlement with confidence.

Below, we explain vendor and buyer rights, key protections in the Victorian contract framework, common pre-settlement risks (including Bass Coast scenarios), and the steps our team takes to manage those risks from pre-contract review through to handover.

What the deposit really means

Once a Contract of Sale is signed and exchanged, the deposit is typically held in the agent’s trust account or the vendor’s conveyancer trust account. It secures performance of the contract and forms part of the price at settlement. It does not, by itself, transfer ownership or remove the need to meet conditions. If the contract includes a finance condition or other special conditions, the buyer still needs to satisfy those terms within the agreed timeframe.

If a buyer validly rescinds under a cooling off right or a finance clause, the deposit is usually returned in accordance with the contract, often less a prescribed amount in the case of cooling off. If a buyer defaults, the vendor may be entitled to keep the deposit and pursue additional remedies, subject to the contract and the law.

Cooling off, finance and special conditions

Cooling off: In Victoria, most private sales allow a three clear business day cooling off period. There are exclusions, including properties bought at or within three clear business days of auction, and certain commercial or high-value transactions. If you cool off, a small deduction from the deposit typically applies.
Finance condition: Many contracts are “subject to finance.” The buyer must make genuine efforts to obtain approval and notify the vendor by the due date. If finance is declined and notice is given correctly, the buyer can usually rescind without penalty.
Building, pest and other special conditions: Private sale contracts often include inspection or due diligence clauses. These must be used in good faith and strictly within time. Missing a date or giving an imprecise notice can convert a protective clause into a risk.

Our team regularly amends and clarifies these clauses before you sign so timeframes, notice requirements and triggers are workable and realistic.

Can a seller pull out before settlement?

A vendor in Victoria cannot simply change their mind after exchange. However, a vendor can terminate if the buyer defaults in a way allowed by the contract, such as failing to pay the deposit on time, not satisfying a condition they were obliged to meet, or not settling after a valid notice to complete (also called a default notice). Some contracts allow termination if a buyer fails to provide required information or documents, such as timely Verification of Identity or transfer signing, where delay causes breach.

In rare cases, a vendor may also be able to rescind under a special condition that expressly permits it, or because of a serious title problem that cannot be remedied as required by the contract and law. These scenarios are fact specific and need prompt legal guidance.

What happens if a buyer defaults?

If a buyer misses a key deadline or fails to settle, the vendor can issue a default notice. This typically gives a short period to remedy the breach. If the breach is not fixed, the vendor may terminate, keep the deposit, and claim reasonable losses as permitted by the contract. Because rights turn on exact wording and timing, good file management, clear diarising and lender coordination make a real difference.

Who bears the risk between exchange and settlement?

Under standard Victorian Contract of Sale terms, the property is usually at the vendor’s risk until settlement. The buyer gets the benefit of a final inspection to check the property’s condition is as at the day of sale, fair wear and tear excepted. If substantial damage occurs before settlement, the buyer may be entitled to delay, require repairs, negotiate compensation or, in significant cases, rescind. It is also prudent for buyers to arrange insurance from the day after signing because special conditions, lender requirements or practical consequences can shift risk or create gaps.

Common pre-settlement risk scenarios

Storm damage on the Bass Coast: Severe winds or flooding around Cowes, Inverloch or Wonthaggi can damage roofs, fences and sheds between exchange and settlement. We confirm repairs, seek builder invoices and negotiate adjustments where appropriate. Where damage is significant, we work through options under the contract to avoid an unfair handover.
Erosion and coastal overlays: Planning overlays on Phillip Island and the Mornington Peninsula can restrict rebuilding, extensions or sea-wall works. Undisclosed constraints may justify specific remedies or renegotiation if the contract promised something different. We check overlays early and, where needed, adjust conditions before you sign.
Chattels not included: If a dishwasher, wood heater or jetty ramp was not listed as an inclusion, it may not be part of the sale, even if shown at inspection. We align the inclusions list with what you expect, request photos, and confirm at final inspection.
Title defects and undisclosed easements: Drainage easements, covenants or a shared access arrangement can affect use and value. Our title searches flag these issues and we raise requisitions promptly. If there is a serious defect that the vendor cannot or will not fix, the contract may provide a pathway to compensation or rescission.

Defaults, notices to complete and practical steps

If a timeline is drifting, early communication avoids default. When needed, we:

Serve or respond to default notices correctly, with precise dates and remedies.
Coordinate with lenders to remove bottlenecks around payout figures, discharge authorities and booking windows in PEXA.
Prepare settlement statements and adjustments early, verify figures with councils and water authorities, and confirm meter readings so there are no last-minute surprises.

If you are concerned about meeting a date, contact us as soon as possible. Often, a short agreed extension is better than a formal default.

What to do if something goes wrong

Tell your conveyancer immediately. Photos, invoices and written agent updates help.
Keep finance moving. Provide any lender documents requested and complete Verification of Identity early.
Document final inspection issues. List defects or missing inclusions and propose practical remedies, such as repair, replacement or a reasonable adjustment at settlement.
Stay insurance aware. Even where the vendor bears risk, confirm your cover from signing so your lender is satisfied and you have a backstop.

Our end-to-end approach includes pre-contract checks, proactive communication and early PEXA scheduling to minimise rollover risk around holidays and long weekends that affect the Bass Coast and Mornington Peninsula. For urgent auction or private sale decisions, we provide same day contract reviews in Cowes and Dromana so you can sign with eyes open. If you need a local team for conveyancing in Cowes, you can learn more about our conveyancing services and request timing advice through our main page for conveyancer Cowes at Sargeants Bass Coast Conveyancing: https://www.sargeantsbasscoast.com.au/. If you are closer to the Peninsula, speak with a dedicated dromana conveyancer through our Dromana contact page: https://www.sargeantsbasscoast.com.au/contact/dromana.

How we manage risk from signing to settlement

Pre-contract review: We check the Section 32, title, easements, overlays, owners corporation documents and special conditions. Where needed, we amend clauses to protect you before you sign.
Transaction vigilance: We coordinate Verification of Identity, transfers, lender authorities and discharge requests early, and we reconfirm dates with agents and banks to keep momentum.
Settlement accuracy: We prepare detailed settlement statements with confirmed rate and water adjustments, credits and levies, and we track lender bookings in PEXA to avoid last-minute delays.
Coastal focus: For Bass Coast properties, we investigate flood and erosion overlays, drainage easements and coastal hazard controls that can affect insurability and future works.

If you need help beyond Cowes, we also assist with conveyancer in Dromana matters via our Peninsula office page: https://www.sargeantsbasscoast.com.au/contact/dromana, and provide residential conveyancing Wonthaggi and broader Bass Coast support through our main practice site: https://www.sargeantsbasscoast.com.au/.

Quick FAQ

Can a seller pull out before settlement in Victoria? Not without cause. A vendor can terminate only where the buyer is in breach and fails to remedy after a valid default notice, or under a contract clause or legal right that expressly permits rescission.
Can a seller pull out after a deposit is paid? Payment of the deposit does not prevent a vendor from exercising termination rights for buyer default. If the buyer is compliant, the vendor cannot simply walk away.
Who bears risk between exchange and settlement? Under standard terms, the vendor bears the risk until settlement. Buyers should still arrange insurance from signing and use the final inspection to confirm condition.
What is the “risk” in a Contract of Sale? Risk refers to who carries the consequences of loss or damage to the property in the period before settlement, and the broader contractual risks around finance, timing, title issues and compliance.
Who bears the risk of loss in a sale? Typically the vendor up to settlement under Victorian standard conditions, subject to any special conditions and statutory rights.

Summary and next step

Between exchange and settlement, rights and risks in a Victorian Contract of Sale turn on details: conditions, notices, timing and practical management. Vendors cannot cancel at will, buyers must meet conditions, and risk of loss usually remains with the vendor until settlement. The best protection is early review and clear amendments before you sign, followed by vigilant coordination of lenders, statements and inspections.

If you are preparing to buy or sell in Cowes, Wonthaggi, Dromana or anywhere across Victoria, have us review your contract terms before you sign to reduce risk and set you up for a smoother settlement. We provide fixed-fee, end-to-end support with no hidden costs and attentive local guidance.