When buying or selling property in Victoria, you may notice council rates, water charges or Owners Corporation fees included in the settlement statement.
This sometimes leads to a common question:
“Can I just pay these bills myself after settlement instead of having them adjusted at settlement?”
The answer is generally not simply a matter of choosing which way you prefer to pay them.
The settlement process is designed to fairly apportion certain property-related expenses between the buyer and seller according to their respective periods of ownership.
What Are Settlement Adjustments?
A settlement adjustment is an amount calculated so that the buyer and seller each pay the appropriate share of certain property expenses.
For example, if the seller has already paid council rates covering a period that extends beyond settlement, the buyer may need to reimburse the seller for the portion relating to the buyer’s period of ownership.
Similarly, if an amount remains outstanding, the adjustment may be made so that the appropriate party bears the relevant portion.
The exact treatment depends on the particular charge and the Contract of Sale.
Why Are Adjustments Made at Settlement?
The purpose is to ensure that the buyer and seller are generally responsible for the relevant costs associated with their respective periods of ownership.
For example:
Seller’s ownership:
1 January → 15 August
Buyer’s ownership:
15 August → 31 December
If the seller has already paid a full year’s rates, an adjustment may be made at settlement so the buyer contributes the portion relating to the period after settlement.
This avoids the seller paying expenses that relate to the buyer’s period of ownership.
Can I Ask the Seller Not to Adjust the Rates?
You can ask, but whether the parties can agree to a different arrangement depends on the Contract of Sale and the circumstances.
A buyer should not assume that the seller is required to accept a request simply because the buyer would prefer to pay the account directly.
Similarly, a seller should not assume that every property expense is automatically adjusted in the same way.
Your conveyancer will review the relevant charges and calculate the applicable adjustments.
What About Council Rates?
Council rates are commonly considered as part of the settlement adjustment process.
The calculation generally takes into account:
- The relevant rating period
- Amounts already paid
- Amounts outstanding
- The settlement date
- The respective periods of ownership
The exact calculation depends on the relevant rates notice and the transaction.
What If the Seller Has Already Paid the Council Rates?
If the seller has paid rates covering a period after settlement, the buyer may need to reimburse the seller for the buyer’s share through the settlement adjustment.
For example, if the seller has paid the rates in advance for the rating period, the settlement statement may include an amount payable by the buyer.
This does not necessarily mean the buyer is paying the rates twice.
The buyer is reimbursing the seller for the portion that relates to the buyer’s ownership period.
What If Council Rates Are Outstanding?
If rates remain unpaid, the settlement adjustment may take the outstanding amount into account.
The exact treatment depends on the circumstances and the Contract of Sale.
Your conveyancer will check the relevant information and calculate the appropriate adjustment.
What About Water Charges?
Water charges can also be dealt with through settlement adjustments.
However, water accounts can contain different types of charges, and not every charge is necessarily treated in exactly the same way.
For example, an account may include:
- Water usage
- Sewerage charges
- Service charges
- Other property-related charges
Your conveyancer will consider the relevant account and the applicable settlement requirements.
What If the Seller Has Paid the Water Bill?
If the seller has paid charges covering a period after settlement, an adjustment may be made so the buyer contributes the relevant portion.
The buyer then becomes responsible for future charges after settlement.
What If the Water Bill Has Not Been Issued Yet?
Sometimes a final water account may not have been issued by settlement.
There may still be an appropriate adjustment or other arrangement depending on the circumstances and available information.
Your conveyancer can explain how the water charges are being dealt with in your transaction.
What About Owners Corporation Fees?
If you are buying an apartment, unit or other property affected by an Owners Corporation, Owners Corporation fees may also need to be considered.
The seller may have already paid fees that cover a period after settlement.
Alternatively, there may be fees outstanding.
The settlement adjustment will generally take the relevant period and amounts into account where appropriate.
Can I Just Pay the Owners Corporation After Settlement?
Again, this is not necessarily a simple choice.
The Contract of Sale and the relevant Owners Corporation information should be reviewed.
The buyer should understand:
- What fees have been paid
- What fees are outstanding
- The period covered
- Whether there are any special levies
- Whether any other amounts are owing
Your conveyancer will consider these matters as part of the settlement process.
What About Special Levies?
Special levies can be more complicated than ordinary Owners Corporation fees.
If a special levy has been raised before settlement, the Contract of Sale and the circumstances need to be considered carefully.
Questions may include:
- When was the levy struck?
- Who is legally responsible?
- Has it already been paid?
- Is it due before or after settlement?
- Is there a specific contractual provision dealing with it?
Do not assume that a special levy is automatically treated in the same way as ordinary Owners Corporation fees.
Can the Buyer and Seller Agree Not to Adjust Something?
Sometimes the parties may agree to a particular arrangement.
However, any agreement should be properly documented and should be consistent with the Contract of Sale and applicable requirements.
Do not rely on a casual verbal agreement between the buyer and seller or an informal conversation with the agent.
If you want a different arrangement, raise it with your conveyancer.
Does the Buyer Pay the Seller Directly?
Usually, settlement adjustments are incorporated into the settlement figures rather than requiring the buyer to separately reimburse the seller after settlement.
This helps ensure the amounts are dealt with as part of the overall settlement calculation.
The exact process depends on the transaction and settlement arrangements.
What If I Refuse to Pay the Adjustment?
A buyer should not simply refuse to pay an amount shown on the settlement statement without first discussing it with their conveyancer.
If you believe an adjustment is incorrect, ask your conveyancer to explain:
- What the adjustment relates to
- How it was calculated
- Which period it covers
- Why it has been included
If there is an error, it can then be addressed before settlement.
What If I Don’t Agree With the Calculation?
If you believe a rates, water or Owners Corporation adjustment is incorrect, raise the issue as early as possible.
Your conveyancer can review:
- The relevant notice
- The account
- The settlement statement
- The Contract of Sale
- The applicable ownership period
It is much easier to resolve an adjustment issue before settlement than after settlement.
What Should Buyers Check Before Settlement?
Before settlement, buyers should consider checking:
☐ Council rates adjustment
☐ Water charges adjustment
☐ Owners Corporation fees
☐ Any outstanding property-related charges
☐ Any special levies
☐ Settlement statement
☐ Settlement date used for calculations
If something is unclear, ask your conveyancer before settlement.
What Should Sellers Check?
Sellers should also review their settlement statement.
Check that:
☐ Rates adjustments appear correct
☐ Water adjustments appear correct
☐ Owners Corporation adjustments are included where applicable
☐ Any outstanding amounts have been considered
☐ The settlement amount is understood
Your conveyancer should explain the relevant adjustments to you.
What Happens After Settlement?
Once settlement has occurred, the buyer generally becomes responsible for property-related expenses applicable to their period of ownership.
This may include:
- Council rates
- Water charges
- Owners Corporation fees
- Utilities
- Other ongoing property expenses
You should make sure the relevant authorities and service providers have your correct contact details.
Read our related article: Do I Need to Contact Council and the Water Authority After Settlement?
For more information about what buyers should organise after settlement, see our What Happens After Settlement in Victoria? A Buyer’s Checklist.
Common Mistakes to Avoid
Assuming You Can Pay Everything Yourself Later
Settlement adjustments exist to apportion certain expenses between the parties.
Assuming Every Charge Is Treated the Same Way
Council rates, water charges and Owners Corporation fees can have different rules and considerations.
Forgetting About Special Levies
Special levies require particular attention when buying an Owners Corporation property.
Waiting Until Settlement Day to Question an Adjustment
Raise concerns as soon as you receive the settlement figures.
Relying on the Agent to Explain the Legal Position
The agent can provide information about the transaction, but your conveyancer should advise you about the conveyancing and settlement implications.
Frequently Asked Questions
Can I refuse to pay council rates at settlement?
You should not simply refuse a settlement adjustment. If you believe an amount is incorrect, ask your conveyancer to review it.
Can I pay the council rates myself after settlement?
The treatment depends on the circumstances and the Contract of Sale. Rates may be adjusted at settlement so each party pays the appropriate portion.
Are water charges adjusted at settlement?
Certain water charges may be adjusted between the buyer and seller. The exact treatment depends on the account and applicable requirements.
Do Owners Corporation fees get adjusted at settlement?
They may be adjusted according to the relevant period and circumstances.
What about a special levy?
A special levy should be reviewed separately. The date it was struck, who is responsible and the terms of the Contract of Sale can all be relevant.
What if I think the settlement adjustment is wrong?
Contact your conveyancer before settlement so the calculation can be reviewed and corrected if necessary.
Do I pay the seller separately after settlement?
Generally, amounts dealt with through settlement adjustments are incorporated into the settlement figures rather than being paid separately afterwards.
How Prox Conveyancing Can Help
Settlement adjustments can sometimes look confusing, particularly when several different property expenses appear on the settlement statement.
At Prox Conveyancing, we help buyers and sellers understand how relevant property expenses are dealt with as part of settlement.
If you have questions about council rates, water charges, Owners Corporation fees or other settlement adjustments, ask your conveyancer to explain the calculation before settlement.
Understanding the figures before settlement can give you confidence that you are paying the correct amount.
About the Author
Meet Sally
Sally Kwok is a Licensed Conveyancer and the Director of Prox Conveyancing. With more than 16 years of experience in the conveyancing industry, she is committed to helping buyers and sellers navigate Victorian property transactions with confidence. Sally is passionate about providing clear communication, practical guidance and personalised service throughout every stage of the conveyancing process.
👉 Learn more about Sally on our About page.
About Prox Conveyancing
Prox Conveyancing is a Victorian conveyancing practice providing professional conveyancing services for residential property transactions across Victoria. We assist buyers, sellers, investors and families with a wide range of conveyancing matters, delivering personalised service, transparent communication and professional support from contract through to settlement.
👉 Learn more about Prox Conveyancing on our About page.
This article provides general information only and is not legal advice. Every property transaction is unique, and the information above may not apply to your particular circumstances. If you require advice about your specific situation, please contact a qualified legal professional or licensed conveyancer.