Settlement Is Done: So Where Are the Keys? What the 2026 NSW Contract Says About Possession

For most property purchasers, settlement day carries a single emotional anchor: the keys. The months of inspections, finance negotiations, legal work, and waiting distil, in the popular imagination, to the moment when a set of keys changes hands and the door of a new home swings open.

The legal reality is slightly more layered than that. Settlement is a precise legal event with precise legal consequences, but the handover of physical possession, and in particular the release of keys, follows a process that is sometimes misunderstood by buyers and sellers alike. In an era of electronic settlement through the PEXA platform, where no one attends a physical settlement table and the transfer of title happens automatically and simultaneously with the transfer of funds, the question of when keys can be released has become more procedurally significant, and more capable of generating frustration, than it was in the paper-based era.

The release this year of the new standard form Contract for Sale and Purchase of Land 2026 Edition, published by the Law Society of NSW and the Real Estate Institute of NSW on 2 March 2026 and mandatory for all NSW residential contracts exchanged from 1 June 2026, provides an appropriate moment to examine how the obligation to hand over possession operates, what "vacant possession" actually means under NSW law, and what a purchaser can do when things do not go as planned.

The 2026 Contract: A New Standard Form in a Changed Landscape

The 2026 Edition replaces the 2022 Edition of the standard form contract, which had been the operative document for all NSW residential transactions exchanged from March 2023. The key legislative driver for the update was the Conveyancing and Real Property Amendment Act 2025 (NSW), which commenced in the main on 15 August 2025. That legislation extended the regulatory framework governing options over residential property specifically, bringing "put options" (options to compel a purchase) within the same regime that previously applied only to call options. The changes required corresponding amendments to the prescribed form of cooling-off notice and prompted a broader review of the standard form contract.

At the same time, the Law Society's Property Law Committee took the opportunity to address a number of other issues – including some identified by the NSW Supreme Court. In Ahmau Developments Pty Ltd v Preet [2025] NSWSC, Justice Parker's analysis of the 2022 contract identified an overlap between clause 28 (dealing with unregistered plans) and clause 29 (dealing with conditional contracts) that created ambiguity about which regime applied in certain off-the-plan transactions. The 2026 Edition corrects that overlap, making clear that clause 29 does not apply where clause 28 already governs the transaction. Other changes include updated inclusions (solar batteries have been added to the standard inclusions list), revised warnings about the AML/CTF obligations that will apply to conveyancers from 1 July 2026, and harmonised language about the standard required in performing contractual obligations, replacing the phrase "everything reasonable" with "whatever is reasonably necessary".

From 1 June 2026, use of the 2022 Edition creates genuine legal risk. Vendors who exchange on the old form after that date may face purchaser rescission rights arising from the incorrect form of cooling-off notice. Practitioners and sellers should ensure they are using the current edition for all transactions exchanged from that date.

The Obligation to Give Vacant Possession

At the core of every residential property sale is an obligation that may sound simple but generates significant practical complexity: unless the contract provides otherwise, the vendor must give the purchaser vacant possession of the property at settlement.

"Vacant possession" in this context means more than simply removing the furniture. Under NSW law, the obligation requires that the property be physically available to the purchaser, unoccupied by any person or animal, cleared of the vendor's belongings, and with all keys, access devices (garage remotes, security fobs, alarm codes), and associated equipment handed over. A property from which the vendor's possessions have been removed but which contains rubbish, abandoned items, or cleaning products left behind does not satisfy the vacant possession requirement. Nor does a property where a tenant remains in occupation without the purchaser's agreement.

The 2026 Contract maintains the standard vacant possession obligation while containing specific provisions for circumstances where the vendor gives the purchaser possession before completion – that is, where early access is agreed. Under those early access provisions, the risk associated with the property transfers to the purchaser from the moment possession is given, not from settlement. This has direct implications for insurance: a purchaser who obtains early access should arrange appropriate cover before moving in or carrying out any work, even before settlement is technically complete.

When Does Risk Pass? Section 66K and Its Implications

The question of when risk passes meaning who bears the consequences if the property is damaged between exchange and settlement is answered by section 66K of the Conveyancing Act 1919 (NSW). Under that provision, the risk of damage to the property remains with the vendor until completion or until the purchaser takes possession of the property, if possession occurs before completion.

This means that a vendor who has vacated the property and handed the purchaser early access has effectively transferred the risk of damage from that point, regardless of whether settlement has occurred. A fire, a burst pipe, or storm damage after the purchaser moves in but before settlement is complete falls on the purchaser under section 66K. The vendor's insurance obligation has, in practical terms, shifted.

Conversely, where the property is damaged after exchange but before settlement and the purchaser has not yet been given possession, the vendor bears the risk. If that damage is substantial, the purchaser may have rights to rescind the contract or to seek a reduction in the purchase price. The precise remedies depend on the nature and extent of the damage and the terms of the specific contract.

The interaction between section 66K and the vacant possession obligation is why the timing of key release matters beyond mere convenience. Until keys are released, the purchaser does not have possession. Until the purchaser has possession, the statutory risk allocation under section 66K favours the purchaser.

How Electronic Settlement Has Changed the Process

In the era before electronic settlement before PEXA became mandatory for most NSW transactions settlement occurred physically. Representatives of the buyer and seller (and their banks) met at a settlement table, exchanged documents and bank cheques, and confirmed the transaction was complete. At that point, the vendor's representative released the keys. The connection between settlement and key release was immediate and tangible.

Since the shift to electronic settlement through PEXA, that direct handover has disappeared. A PEXA settlement involves all parties joining a shared digital workspace in advance of the settlement date. On settlement day, funds are released electronically, title documents are lodged simultaneously with NSW Land Registry Services, and settlement is confirmed automatically. No one attends. No keys change hands in a settlement room.

The question of key release has therefore been separated from the settlement event itself. After electronic settlement completes:

• The purchaser's conveyancer receives electronic confirmation that settlement is complete.
• The conveyancer notifies the real estate agent that settlement has been confirmed.
• The real estate agent releases the keys – either from their office or from a key safe at the property – to the purchaser or the purchaser's representative.

PEXA settlements generally complete by 5 pm on the scheduled date, though they typically complete well before then when all parties are prepared. The key release cannot occur until the conveyancer has confirmed settlement to the agent, and the agent has actioned that confirmation. In practice, there can be a gap of one to two hours between the technical completion of settlement and the physical availability of keys.

Purchasers who plan to move in on settlement day should arrange removalists and access in a way that accounts for this timing. Booking a removalist to arrive at 9 am on settlement day based on an assumption that settlement will complete in the morning is, in the overwhelming majority of cases, optimistic.

What Happens If the Vendor Has Not Vacated?

The obligation to give vacant possession is a contractual obligation owed by the vendor to the purchaser. Failure to provide vacant possession at settlement is a breach of contract, and it is a breach with real consequences.

Where a vendor has not vacated the property by settlement, the purchaser is entitled to refuse to settle until vacant possession is provided. This is not merely a tactical option; it reflects the legal position that the purchase is conditional on the delivery of what was agreed. A purchaser who settles while the vendor or a third party remains in occupation risks losing the ability to enforce the vacant possession obligation.

If the vendor cannot or will not provide vacant possession, the purchaser may elect to issue a Notice to Complete, giving the vendor a reasonable time typically 14 days to remedy the breach. If the breach is not remedied within that period, the purchaser may be entitled to terminate the contract and recover the deposit, together with any damages arising from the vendor's breach.

In more extreme situations — for example, where a vendor refuses to vacate or where a tenant remains in occupation unlawfully the purchaser may need to commence proceedings in the NSW Civil and Administrative Tribunal or the Local Court to obtain orders for possession. This is a position no purchaser wants to find themselves in after exchange, which is why the pre-settlement inspection (available within three days of settlement under the standard contract) is an important protection that should always be exercised.

Pre-Settlement Inspection: More Than a Formality

The three-day pre-settlement inspection right is not simply an opportunity to confirm that the lights work. It is the purchaser's last practical opportunity, before settlement occurs, to verify that the vendor's obligations, including the obligation to provide vacant possession are capable of being met.

If the pre-settlement inspection reveals that the vendor is still in occupation, that belongings have not been removed, or that the property has been damaged or stripped of inclusions, the purchaser has time to raise those issues with the vendor through their conveyancer and, if necessary, to refuse to proceed with settlement until they are resolved.

Purchasers who skip the pre-settlement inspection because the property appears straightforward a vacant property, a cooperative vendor sometimes discover at settlement that inclusions have been removed (a dishwasher, curtains, a fixed garden structure), that keys are incomplete (garage remotes, additional sets, strata building fobs), or that minor damage has occurred. Addressing these issues before settlement, rather than after, places the purchaser in a substantially stronger position.

Tenanted Properties: A Different Set of Rules

Where a property is sold with a tenant in occupation often described as being sold "subject to tenancy" the vacant possession obligation does not apply in the same way. The purchaser takes the property with the tenant in place, and the tenant's rights under the Residential Tenancies Act 2010 (NSW) are not affected by the change of ownership.

In this scenario, the "keys" released at settlement are the keys held by the managing agent or landlord, not the keys held by the tenant. The purchaser steps into the vendor's position as landlord and inherits all of the vendor's obligations under the tenancy agreement. If the purchaser intends to occupy the property themselves, they must follow the proper processes under the Act to bring the tenancy to an end which in most cases requires providing the tenant with a minimum of 90 days' notice once the fixed term expires and cannot occur simply because the property has changed hands.

The contract should clearly identify whether the property is being sold with vacant possession or subject to an existing tenancy. Purchasers who intend to occupy a tenanted property should obtain specific legal advice before exchange about the timing and process for recovering possession.

The Practical Answer

The question "when can the keys be released?" has a straightforward legal answer: after settlement has been confirmed as complete, provided the vendor has met the obligation to give vacant possession. In an electronic settlement, that means after PEXA confirms the transaction, the conveyancer notifies the agent, and the agent releases the keys. In practice, the gap between those steps is measured in hours rather than days.

But embedded in that simple answer are a series of obligations, risks, and practical considerations that the 2026 NSW Contract and the legislation underpinning it manage with some care. Purchasers who understand what "vacant possession" actually requires, when risk passes under section 66K, and what rights they have if those obligations are not met are better placed to protect themselves in the final and most consequential stage of a property transaction.

Shire Legal is a boutique law firm based in Miranda, NSW, specialising in property, business and estates law. This post is intended as general legal information only and does not constitute legal advice. You should seek advice specific to your circumstances before taking any action.