It's only fair that the vendor pays for the property expenses up until the date of settlement and the purchaser pays after settlement has taken place. So prior to settlement calculations are made to determine what proportion of council rates, water usage, strata levies and the like are payable by the vendor and how much are paid by the purchaser. These are referred to in the property world as settlement adjustments.
Settlement adjustments will help determine how much money the purchaser will actually hand over at settlement as funds may need to be added or deducted depending on where the Council rates have been paid up to.
Other examples of settlement adjustments which may need to be calculated is if the vendor has a mortgage. In which case, the purchaser will need to pay to have it discharged. Others include if the purchaser moved into the property early and needs to pay a fee or if settlement has been delayed and interest is payable.
As a purchaser you want to avoid being stung with expenses that don’t belong to you. If you are purchasing a property and not sure if certain settlement adjustments need to be taken into account make sure to speak with your Solicitor or Conveyancer.
Remember, if you have a specific question that you would like to see featured in our column or have a property matter that you would like our help with you can get in touch with us on 63312911. We’re here to help.
Please note the answers provided are for your general information only and we ask that you call our office on 02 6331 2911 to obtain detailed legal advice for your individual situation.