This article is for general information purposes only and reflects the state of information at the time of publication. It is not legal or financial advice. Always seek professional advice tailored to your specific circumstances before making decisions.
So you signed a contract stating a fixed sum for the property—why are you being told that a different number is required at settlement? Owning a property involves payments for several services. In this article, Bliss Conveyancing explores how those services are accounted for in a conveyancing transaction.
The Gospel According to Conveyancers
If the Shroud of Turin is proof to Christians that Jesus once walked the earth, the settlement statement is proof to conveyancers that properties change hands correctly. As a property owner, you are responsible for services provided by local and State Governments, including rates, land tax, stamp duty, and other municipal charges.
Some charges are levied in arrears (you pay for the period after it has passed), and some are paid in advance (you pay for the period before it starts). This means that when a property is transferred, the purchase price is agreed upon, but adjustments are often needed for items already paid by the seller or owing to the buyer.
Well Adjusted
To ensure fairness to both parties, their representatives calculate adjustments to the settlement sum. Common adjustments include:
- Council Rates: If the seller has paid rates for a period extending past settlement, an adjustment in favour of the seller is calculated. If rates are unpaid, the buyer will cover the period prior to settlement.
- Water Rates: Adjusted similarly to council rates, depending on the billing period and payment timing.
- Land Tax: Levied annually to certain landowners, adjusted based on the settlement period and purchaser liability.
- Other Adjustments: Occasionally, adjustments include penalty interest, mortgage discharge fees, and payments for chattels like furniture or equipment purchased by the buyer.
Double Check It
Even after the total purchase price is agreed, it can be confusing because the seller’s representative dictates how it is paid. You may see amounts payable to the seller’s bank, solicitor, real estate agent, local council, or State Government. Regardless of the breakdown, the total will always match the settlement statement.
For electronic settlements, these are simply a series of payments. For physical settlements, payments are made via bank cheques or from a legal trust account.
Getting It Right
Using a professional like Bliss Conveyancing ensures your settlement figures are calculated correctly. If handling it yourself, pay close attention to all rates and taxes to avoid overpaying. Bliss Conveyancing is available to discuss any concerns or queries about your conveyance at any time.
