Settlement Adjustments Explained: Rates, Water, Owners Corporation and Rent

The amount a buyer pays at settlement is not simply the purchase price minus the deposit. Settlement adjustments apportion certain property income and outgoings between buyer and seller so each party bears the agreed share up to or from the settlement date.

Why adjustments are made

Council rates, water charges, owners corporation fees and rent often cover a period that crosses the settlement date. If the seller has paid an amount covering time after settlement, the buyer may reimburse the post-settlement share. If an amount is unpaid, the figures may be adjusted so the relevant liability is accounted for.

Common adjustment items

Council rates and municipal charges.

Water and sewerage charges, including usage where applicable.

Owners corporation administrative and maintenance fund levies.

Rent, bond and property-management amounts for a tenanted property.

Land tax where the contract and law permit an adjustment.

Special levies, service agreements or other property outgoings if addressed by the contract.

How the calculation works

The calculation normally uses the relevant billing period and apportions the amount by days. The contract determines whether the settlement date is treated as the buyer’s or seller’s day and whether a particular outgoing is adjustable. Figures may change when updated certificates, meter information or rent statements arrive.

Adjustments are not the same as stamp duty

Transfer duty, registration fees, lender fees and conveyancing costs are separate from the seller-to-buyer adjustment calculation. Buyers should request a complete funds statement so they understand the purchase balance, adjustments and other amounts required.

Check unusual amounts early

Large owners corporation arrears, special levies, land tax or rental discrepancies may require clarification before settlement. Ask questions when the draft statement is provided rather than waiting until funds are due.

How DY Conveyancing Melbourne can help

A contract should be reviewed before you sign or bid, while there is still time to identify risk and request changes. DY Conveyancing Melbourne assists buyers and sellers across Victoria with contract review, property transfers and electronic settlement. Contact our team before committing to the transaction.

Frequently asked questions

Why did my settlement amount increase?

The final figure may include adjustments and transaction costs in addition to the balance price.

Who pays rates on settlement day?

The contract and adjustment convention determine the allocation.

Are special owners corporation levies adjusted?

It depends on the levy, due date and contract.

Is land tax always adjusted?

No. Current law and contract terms must be checked for the particular transaction.

Important information

This article provides general information only and is not legal advice. Obtain advice about your contract and circumstances before acting.