In this video we explain in 5 minutes all that you need to know about SETTLEMENT FIGURES for QLD property / conveyancing...

We walk through the different adjustments and how we tackle them for settlement - from mortages, to rates, water, body corporate adjustments - as well as hot tips for rent adjustments and how to deal with bills close to settlement.

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Hi everybody - George Sourris, Empire Legal.

Today's topic: Queensland property settlement figures.

Did you know that Queensland property lawyers deal with maths every single day? This lawyer deliberately did a law degree, to avoid doing maths every day.  But here we are.

Where do we do said maths, you ask? In our settlement figures!

We are going to spend the next few minutes explaining exactly how we calculate our settlement figures and all the adjustments that we use for settlement. 

Our figures for settlement are called a settlement statement (see below extract). This is what we use to do all of our calculations leading into a property settlement. The below image is to be referenced for this blog as an example. 

At the top of the settlement statement, you will see -

1) Our internal matter number;

2) The parties involved with the transaction;

3) The property address

4) The date of the settlement

5) The adjustment date

6) The contract date

7) The settlement place; and

8) The settlement time.

Next we insert the purchase price,  then we deduct any deposits that are held. Then the release of mortgage fees. So what this is? This is the $224.32 - that's what it costs every single time to remove a mortgage off a Title.

So this is reimbursing the buyer - because this is what it's going to cost the seller to remove the mortgage. So if there were two mortgages, this amount would be doubled, etc.

Next, we move down to rates. So this property is in the Gold Coast. Note here that Gold Coast City Council does their rates adjustments in six month blocks.

What we do is we  pro-rata every line item, to the settlement day.

So, what we look at is throughout the rating period, from 1st of July to 31st of December,  we're adjusting it to the settlement date of the 24th of July. So in this instance, this amount here has been calculated to be reimbursed to the seller. If you look right down the bottom of the settlement statement (you'll see some cheques), we are paying the Gold Coast City Council in full. So, we're paying the council the whole amount owing for the rates for this period, and then the vendor is getting reimbursed for their share of that pro-rated amount. 

The same process here works for water usage, so we actually calculate through the special water meter read the amount of water that is being used, and that will be paid by the vendor up to and including the settlement day, and then the day after settlement it becomes the buyers cost to bear.

The same process occurs for any Body Corporate levies. If you look at the above example, you will see the difference here in this instance is that the Body Coroprate levies are calculated in a quarterly period (vs council which is 6 monthly). 

We calculate all of the above figures off actual current rate search, the water search, and the body corporate levies that we purchase on behalf of the buyer as part of the conveyancing process. 

If there was any land tax, that would get paid as part of the settlement statement as well. 

The next item on our example is the water credit. So the account was in credit a $1.07 - and yes, we actually enter this adjustment - despite it being so minor. We agree with the other side solicitors right down to the last cent; so in this instance the $1.07 is being adjusted in the vendor's favor as credit.  

Next is the water & sewerage access charges. The water supplier charges a daily rate for water and sewerage. So, we work out what that daily rate is (it is different for every council) and then same deal - we pro rata that to the settlement date. 

Tenancy adjustments. Usually we will find that the property manager that is working for the vendor will take care of this and do the adjustments. However, that is not always the case. Sometimes they can't do it or they won't do it, so the solicitors get involved. We do the same thing where we work out the amount of the rent and we pro-rata it to make sure that the vendor is getting paid until settlement and then the day after it's the buyers to receive.

NOTE: if we perform the tenancy adjustments, as per the Standard Terms of within the REIQ Contracts, we cannot collect rent in arrears. So this can get a little bit tricky if the rent is not paid up to date and it's owing, we can't do any adjustments on the settlement statement. 

The last item on the settlement statement - you will see the water usage calculations. This is just the maths that we used to work out the actual water usage. We show our math workings break down, so that between the solicitors if we don't agree, we can work out where one of us may have gone wrong. You'll see here, because this matter has a body corporate, we even apportion it to the lot. So, the whole meter is read and then it's apportioned based on the lot entitlements (i.e 7/156). 

TIP: If you get any bills throughout the conveyance - so rates, water, body corporate, we suggest you chat with your solicitor to avoid any errors in the settlement adjustments. For example - say you're the seller and you pay a water bill the day before settlement and you don't tell us; we may adjust the figures thinking the bill is unpaid (as that is what the search we have performed says) and then you may be out of pocket.

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Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.