So you signed a contract stating that a fixed sum would be paid for the property, why are you being told that a different number is what is required at settlement? Owning a property means the payment of several sums for many different services, in this article Bliss Conveyancing explores the way that those services are accounted for in a conveyancing transaction.
The Gospel According To Conveyancers
If the shroud of Turin is proof to all Christians that Jesus once waked the earth, then the settlement statement is proof to all conveyancers that properties change hands in the right way. As the owner of a property, you are required to subscribe to certain services provided by local and State Governments. These services are paid for by way of rates, land tax, stamp duty and other municipal charges.
Some of these charges are levied in arrears (you pay for the period after it has completed) and some are paid for in advance (you pay for the period before it starts). What this means is that when a property is transferred, the price for the property is agreed upon, but there will always be instances where the seller has already paid for something the buyer will benefit from, or the seller has used something the buyer will have to pay for.
To ensure that the totality of the transaction is fair to both parties, their representatives will calculate and agree upon the adjustments that need to be made to the settlement sum. In most cases, those calculations will include:
Council Rates – if the seller has paid rates for a period that goes past settlement, then an adjustment in favour of the seller will be calculated. If the seller has not yet paid the rates, an adjustment will be made to cover the period prior to settlement that the buyer did not have the benefit of.
Water Rates – depending on the period charged and when payment is made, an adjustment will be made in the same manner as council rates.
Land tax – is levied each year to some land owners and will need to be adjusted based on the period and also the liability of the purchaser for Land Tax.
Other Adjustments – there are other adjustments that are included occasionally, such as penalty interest, mortgage discharge fees and payments for additional chattels like furniture or equipment that the buyer has agreed to purchase.
Double Cheque It
Even once the total purchase figure has been agreed upon, it can still be confusing because the seller’s representative gets to dictate how that figure is to be paid. You may see requests for amounts payable to the seller’s bank, solicitor, reals estate agent, local council, or State Government. Regardless of how many requests are made, they will always total the amount shown on the settlement statement.
When settlement is being conducted electronically, these are just a series of payments that are made. When settlement is being done physically, they will need to be bank cheques or issued from a legal trust account.
Getting It Right
Using the services of a professional like Bliss Conveyancing will ensure that you have your settlement figures calculated correctly. If you are doing it yourself, you will need to pay close attention to all of the rates and taxes that are owing in respect of the property and ensure that you do not pay for something that you are not going to use. Bliss Conveyancing team is available to you at any time to discuss your concerns or queries regarding any aspect of your conveyance.