As a property owner, you are responsible for paying for rates and outgoings associated with your property.
Rates and outgoings are payable at the frequencies appointed by you or the relevant service provider. A frequently asked question is – what happens if I pay rates that exceed the time I am the property owner?
What are rates and outgoings?
Rates and outgoings for a property sale usually refer to rates and services that ‘go with the land’. This includes council rates, water charges, and sometimes Owners Corporation management fees, and sometimes land tax assessment levies.
Other services fees that such as electricity, gas, and telephone services are excluded from rates and outgoings and not included in the Statement of Adjustments.
Statement of Adjustments
Before the settlement day, your lawyer/conveyancer will prepare a statement called the ‘Statement of Adjustments’. The statement of adjustment will calculate and divide the relevant amounts you and the purchaser are responsible for, outlining:
- Any rates and outgoings payable before the settlement day you will bear
- Any rates and outgoings payable after the settlement day to be borne by the purchaser
This means any overpayment of rates and outgoing that you have made will be reimbursed by the purchaser on the settlement day and you will only pay for the period where you are the property owner.
How do I get a refund for the rates I paid?
On the settlement day, you will receive the refund of the rates you have paid as a lump sum combined with the remainder of the purchase price from the property sale.
What happens if rates are not adjusted at settlement?
The Purchaser and the Vendor have a contractual obligation to adjust all periodic outgoings associated with the property. The rates and outgoings would be apportioned between the Purchaser and the Vendor as mentioned above.
If certain rates or outgoings have mistakenly been excluded from the Statement of Adjustments or adjusted incorrectly, you should approach the purchaser’s representative (e.g. Real Estate Agent) to readjust.
How can Title Insurance mitigate risks?
While readjustments can help resolve any incorrect values, Title Insurance can help to safeguard you from these unexpected circumstances, including incorrectly adjustments, or when the purchaser is not contactable.