Childcare Service Approval Transfer: Exchange to Settlement

You and the other side have signed. Deposit paid, contract exchanged, everyone shakes hands. And then nothing visible happens for two months. That gap — the six-to-twelve-week corridor between exchange and settlement — is where childcare deals are actually won or lost, because a signed contract does not let anyone operate a centre. The right to run the service still sits with the seller until a regulator moves it. A childcare service approval transfer is the machinery that moves it, and it runs on a clock neither party controls.

Most buyers and sellers spend enormous energy getting to exchange and then treat settlement as a formality. It is not. Here is what has to happen in that corridor, in what order, and how to keep handover day from becoming the day everything unravels.

The Deal Isn’t Done at Exchange — It’s Done at Handover

At exchange you have a binding contract. What you do not have is the legal ability to educate and care for children on that site. Under the Education and Care Services National Law, the service approval — the approval that attaches to the physical centre — is held by the current approved provider and stays with them until the regulatory authority formally transfers it to the incoming provider. The keys, the CCS payments, the staff employment, and the enrolment relationships all pivot on that single regulatory event.

Two approvals are in play, and they are not the same thing. If you are unclear on which is which, we have set that out in full in our guide to service approval versus provider approval — read that first if the distinction is new to you. In short: the buyer needs their own provider approval, and the centre’s service approval is transferred across to them. This piece is about the second event — the transfer — and the practical corridor around it.

The 60-Day Clock: How a Service Approval Actually Transfers

A service approval is not re-issued from scratch; it is transferred from the outgoing (transferring) provider to the incoming (receiving) provider, with the regulator’s consent. Under the National Law, both providers must give the regulatory authority joint written notice of the intended transfer at least 60 calendar days before the transfer date — a period that was increased from the previous 42 days, so anyone working from older advice will plan too little runway. The regulator can accept a shorter period only in genuinely exceptional circumstances; do not bank on it.

From there the clock runs on a series of shorter deadlines:

• The regulator is taken to have consented if, by 28 calendar days before the transfer date, it has not told the providers it intends to intervene.
• The receiving provider must notify enrolled families of the transfer at least 7 calendar days before it takes effect.
• After the transfer, both providers confirm it in writing to the regulator within 2 calendar days.

The buyer cannot even start this without holding their own provider approval — and a provider approval application can itself take up to 60 days (we cover obtaining one in our provider approval guide). That single fact reorders the whole deal: a buyer who is not already an approved provider needs to be in the provider-approval queue well before exchange, not after it.

These timeframes are the National Law default. Each state and territory administers the process through its own regulatory authority — the NSW Department of Education, the Queensland Early Childhood Regulation Unit, Victoria’s Quality Assessment and Regulation Division, and their equivalents — and their forms, portals, and processing habits differ. Confirm the current requirement with the regulator in your jurisdiction before you commit to a settlement date.

Conditions Precedent: What Has to Be True Before Settlement

The contract of sale should make settlement conditional on the things that must land inside the corridor. If they are not written as conditions precedent, you are relying on goodwill to fix a problem after your money has moved. The usual set includes:

• The buyer obtaining (or holding) provider approval.
• The regulatory authority consenting to the service approval transfer.
• Where the centre is leased, the landlord consenting to the lease assignment.

That last one matters because it runs on its own separate clock, in parallel with the regulator’s — a point we unpack in our guide to lease assignment when selling a leasehold childcare business. The mistake is to imagine these steps happen one after another. They do not. Provider approval, the service-approval transfer notice, and landlord consent should all be lodged and progressing at the same time, because the deal can only settle once the slowest of them has cleared. Sequencing them politely one at a time is the surest way to blow through your settlement date.

Much of what feeds these conditions comes out of the pre-exchange work — the accounts, the compliance history, the outstanding notices. If you have not already pressure-tested those, our due diligence checklist is where that belongs, before exchange rather than during the corridor.

The People and the Places: Staff and Enrolment Transition

A childcare centre is its educators and its families. The legal transfer moves the approval; it does not move the goodwill. In the corridor, the incoming provider typically becomes the new employer of the centre’s staff, which means employment terms, entitlements, and the nominated supervisor and responsible-persons arrangements all need to be settled before day one — not discovered on it. Retaining the room leaders and the centre director through the change is usually the single biggest driver of whether occupancy holds after settlement.

Families need careful handling too. The required parent notification is a legal minimum, not a communication strategy. A change of ownership makes parents nervous — they worry about fees, educators leaving, and philosophy changing. A short, warm, jointly agreed letter reassuring families that the team and the routine continue does more to protect enrolments than any clause in the contract. Enrolment records, CCS enrolment details, waitlists, and immunisation and medical records must all be reconciled and ready to carry across so that subsidy payments do not stall in the first week.

Surviving Handover Day: A Day-One Operating Checklist

Settlement on a childcare business is often set for a Friday, because CCS funding runs on a Monday-to-Friday cycle and a Friday handover lets the new provider start clean on the following Monday. Whatever the day, the incoming operator should walk in with these already sorted:

• Approvals in hand: provider approval confirmed, service approval transfer effective, both providers’ post-transfer notice ready to lodge within two days.
• CCS live: the service registered under the new provider so subsidy keeps flowing without a gap.
• People confirmed: nominated supervisor and responsible persons in place, staff employment transferred, first-week roster set.
• Compliance current: any outstanding conditions or notices on the service approval known and addressed — they transfer with the approval, not with the seller.
• Keys, systems, and money: access, alarm codes, the childcare management software login, bank and payment details, and utility accounts all switched over.

Plan the Corridor Backwards From Settlement

The clean handovers are the ones planned in reverse: fix the transfer date the regulator can realistically meet, count back sixty days for the joint notice, and lodge provider approval, the transfer notice, and landlord consent in parallel from the start. Both sides benefit from getting this right — a seller does not receive final funds until settlement, and a buyer does not want to own a business they cannot yet legally run. Whether you are buying or selling, the corridor between exchange and settlement rewards a plan and punishes improvisation.

Buying or selling a childcare centre and want the handover to go smoothly? Talk to ChildcareLink for practical, specialist guidance through the transfer and settlement process. Visit childcarelink.com.au or contact our team directly.

Sources

• ACECQA, Guide to the National Quality Framework — Section 2.6, Transfer of Service Approval (2026)
• Education and Care Services National Law and National Regulations
• Queensland Department of Education, Early Childhood Regulation Unit — Transfer of Service Approvals (2026)
• McTaggart Grant Lawyers — Changes to notification timeframes for service approval transfer obligations (2024)

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. ChildcareLink recommends seeking independent professional advice tailored to your specific circumstances before making any business or investment decisions.