Understanding the statement of adjustments: What Victorian purchasers and vendors need to know before settlement

You may have already paid or will typically pay all currently levied amounts outstanding at settlement.

• If you have paid for outgoings beyond the settlement date, the adjustments ensure you’re reimbursed appropriately; or

• If you are not up-to-date in payment of outgoings, these arrears will be payable at settlement and will reduce the surplus funds you are entitled to receive.

TIP: Avoid paying bills in the two weeks before settlement without notifying your conveyancer: your conveyancer will ensure unpaid amounts are accounted for in your settlement figures.

Adjustments typically increase the amount payable to the seller at settlement (to compensate them for rates paid beyond settlement).

Understanding this process helps you budget accordingly.

If purchasing at the start of a new financial year, or at the start of the rating period (eg. Annual owner’s corporation period) expect higher adjustment contributions.

TIP: Budget for more than just the balance of the purchase price — adjustments often increase your final payment. You may use the financial details disclose in the Section 32 Vendor Statement to get an idea of the expected rates that will be adjusted.

The council rates are usually based on annual amount (typically the rating period is 1 July–30 June).

The total council rates are then divided into a daily amount (%365 days) and then shared based on number of days owned. 

For example, if settlement occurs on 29th June then the vendor is responsible for 364 days worth of rates and the purchaser 1 day worth of rates.

Includes fixed service charges and water usage.

Service charges may be a quarterly or annual charge depending on the authority.

Usage may be estimated or determined by a special meter reading. When estimating usage the amount of water used on the last reading is used to estimate a daily cost. 

Vendor pays for usage up to settlement.

Includes administrative and maintenance levies. Special levies are generally paid by the vendor if struck before the contract date, or by the purchaser if struck after.

As of 1 Jan 2024, it is illegal for land tax to be apportioned for properties under $10 million.

The Vendor will be responsible for the tax solely.

Where adjustment is permitted it is based on the annual calendar year assessment and the terms of the contract. 

Apportioned if rent is paid in advance. Typically, no adjustment if rent is in arrears.

Applied where early occupancy or post-settlement occupation is agreed between parties as part of the conveyancing transaction.

Government fees for the vendor’s discharge of mortgage or other dealing may need to be adjusted in the purchaser’s favour.

In certain contracts (such as off the plan contracts) credits for overpaid rates or agreed adjustments such as NBN/electricity connection costs may be included

• Purchases all relevant certificates from the authorities to determine current outgoings

• Ensures correct deposit paid has been deducted from balance due to seller

• Calculates and prepares the statement of adjustments

• Sends adjustments to seller’s solicitor, usually 5–10 days prior to settlement.

• Requests confirmation of final amount from seller’s representative at least 2 days before settlement.

• Purchasers will typically be able to view adjustments in the fortnight prior to settlement.

• Reviews and “mirrors” the purchasers version of the adjustments and the certificates relied upon to calculate the statement.

• Checks for recent payments by the vendor not reflected in certificates

• Ensures accurate adjustments including confirmation of deposit paid

• Agrees on the balance payable to the vendor client and notifies the buyers representative at least 2 days prior to settlement of the agreement.

• Vendors will typically be able to view adjustments in the week prior to settlement.