What adjustments occur at settlement?
In getting your matter ready for settlement we will also prepare the settlement figures taking into account any adjustments which are to occur at settlement. There are three key adjustments that typically take place at settlement:
- Council Rates
- Water Rates
- Water Usage
Council rates are for the period 1 July to 30 June each year. The vendor will be liable from 1 July up to the date and settlement, and you as the purchaser will be liable from the date of settlement until 30 June.
For example, if settlement was due on 24 April 2020, the purchaser would allow 67 of 366 days, that being the number of days from 24 April 2020 until 30 June 2020. If council rates for the year were $1,764.80, the purchaser would allow an adjustment of $323.06 at settlement.
Water rates are calculated on a quarterly basis, as follows: –
- 1 July – 30 September
- 30 October – 31 December
- 1 January – 31 March
- 1 April – 30 June
At settlement, you as the purchaser make an allowance to the vendor for the period that you own the property.
For example, if settlement was due on 24 April 2020, the purchaser would allow 67 of 91 days for the quarter, from 24 April 2020 to 30 June 2020. If the water
rates for the quarter were $177.12, the purchaser would make an allowance of $130.40 at settlement.
Water usage is adjusted at settlement, such that the vendor makes an allowance for their usage during the part of the quarter that they have owned the property, so that when the water bill is issued to you, you are able to pay for the previous water usage. In preparing a settlement adjustment sheet, we will order a Section 66 certificate which shows when the meter was last read, the vendors average daily usage and the cost per kilolitre of water. An allowance for the vendor’s usage can then be calculated from the amount of days that quarter that they owned the property, their average usage and the cost per kilolitre of water.
For example, if settlement was due on 24 April 2020, the vendor would allow for an estimate of water usage between 01 April 2020 and 24 April 2020, that being 24 days. If the average usage was 0.59kL and the cost per kilolitre was
$2.24, the Vendor would allow for an adjustment of $31.72.