At settlement, dozens of payments and credits are apportioned between buyer and vendor. Council rates, water charges, Owners Corporation fees, land tax, water consumption, sewerage, outstanding agent fees, mortgage discharge fees — all are calculated to the day of settlement and reconciled. A miscalculated adjustment can leave you out-of-pocket by hundreds or thousands of dollars. Buyers regularly assume the conveyancer handles this seamlessly; in practice, errors are common.
This guide covers the major settlement adjustments, the daily rate calculations, and what every buyer should check on their settlement statement.
What gets adjusted at settlement
| Charge / fee | Adjustment basis | Typical value |
|---|---|---|
| Council rates | Annual / pro-rata to settlement | $1,500–$5,000/yr |
| Water service charges | Quarterly / pro-rata | $150–$400/qtr |
| Water consumption | Meter reading at settlement | $80–$300/qtr |
| Sewerage / drainage | Quarterly / pro-rata | $100–$250/qtr |
| Owners Corporation levies | Quarterly / pro-rata | $500–$2,500/qtr |
| Land tax (vendor liability) | Calendar year / pro-rata | $0–$30,000/yr |
| Insurance (if assigned) | Annual / pro-rata | $1,000–$3,000/yr |
| Rent in advance (if tenanted) | Daily rate / pro-rata | Varies |
| Vendor mortgage discharge | Lump sum at settlement | Vendor pays |
The daily rate calculation
Each periodic charge is converted to a daily rate and apportioned:
- Annual charges (council rates, land tax) — daily rate = annual / 365
- Quarterly charges (water, OC) — daily rate = quarterly / 91 (approximately)
- Monthly charges — daily rate = monthly / 30
Vendor pays the period before settlement; buyer pays the period after. If charges have been pre-paid (annual rates paid in advance), buyer reimburses vendor for the post-settlement portion. If charges are in arrears, vendor pays the pre-settlement portion at settlement.
Worked example — typical settlement
Settlement of a Melbourne apartment on 15 May. Vendor has paid:
- Council rates: $3,650/year, paid for full year (1 July–30 June)
- Water service: $250/quarter, paid current quarter
- OC levies: $2,000/quarter, paid current quarter
Buyer’s adjustment payments to vendor:
- Council rates from 15 May to 30 June (46 days at $10/day) = $460
- Water from 15 May to end of quarter (~46 days) = ~$125
- OC levies from 15 May to end of quarter (~46 days) = ~$1,010
Total buyer adjustment to vendor: ~$1,595
These adjustments are added to the purchase price at settlement. On a $700,000 apartment, the buyer actually pays $701,595 plus any additional fees.
Common errors and how to catch them
- Wrong daily rate. 365-day year vs 366-day leap year. 91-day quarter vs actual quarter days.
- Pre-paid charges not credited. Vendor pre-paid rates for the year — must be credited to vendor on settlement.
- Stale information. Conveyancer used a 6-month-old rates notice. Recent change in rate not captured.
- Special levies missed. OC certificate showed a special levy due. Adjustment must reflect this.
- Land tax for current year not adjusted.Vendor liable for full calendar year if owner on 31 Dec. Buyer should not pay any portion of vendor’s land tax.
- Water consumption not reconciled. Final meter reading at settlement — vendor pays consumption to that point.
Documents to review before settlement
- Settlement Statement. Your conveyancer prepares this 3–5 days before settlement. Review every line.
- Rates notices. Confirm rates amounts match the Section 32 disclosures.
- OC fee notice. Confirm OC levies and any special levies.
- Land tax clearance certificate. Confirms vendor liability for current year.
- Water bill. Most recent bill shows service charge and consumption.
- Mortgage discharge calculation.Vendor’s lender provides discharge figure including any break costs.
What you actually pay at settlement
Total settlement-day payment from buyer:
- Purchase price minus deposit already paid
- Plus settlement adjustments (typically $500–$3,000 net)
- Plus stamp duty
- Plus title transfer registration fees ($150–$300)
- Plus mortgage registration fees ($150)
- Plus PEXA settlement fees ($100–$200)
- Plus your conveyancer’s fee ($1,200–$3,000)
For a $700,000 purchase with $70,000 deposit already paid, expect total settlement-day funds to clear: approximately $670,000 to $680,000 depending on stamp duty status.
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