KEY TAKEAWAYS: You only pay for what you use Settlement adjustments make sure buyers and sellers each pay property costs only for the time they actually own the property. They’re normal (and expected) Extra amounts added or deducted at settlement aren’t mistakes; they’re standard and part of every property transaction in NSW. You don’t have to calculate anything yourself Your conveyancer handles all the numbers, you just need to review and understand the final figures. What Are Settlement Adjustments? Settlement adjustments are financial recalculations made at the time of settlement to fairly divide ongoing property costs between the buyer and the seller. Because many property expenses are paid in advance (like council rates) or in arrears (like water usage), adjustments are necessary, so each party only pays for the period they actually own the property. Understanding Settlement Adjustments in NSW Property Transactions When buying or selling property in New South Wales (NSW), one of the most commonly misunderstood parts of the process is settlement adjustments. These adjustments ensure that both the buyer and seller pay their fair share of property-related expenses (council and water rates etc) up to the settlement date; no more, no less. If you’ve ever looked at a settlement statement and wondered why money is being added or deducted, this guide will break it down in plain English. Common Types of Adjustments in NSW Here are the most typical costs that get adjusted: Council Rates Council rates are usually paid quarterly in advance. If the seller has already paid beyond the settlement date, the buyer reimburses them for the remaining period. If the seller has not paid prior to the settlement date, the seller pays any outstanding amount at the time of settlement. Water Rates Water charges in NSW are split into two parts: Access charges (fixed): usually adjusted like council rates. Usage charges (variable): often calculated based on the latest meter reading. Strata Levies (if applicable) For apartments or townhouses: Strata fees are typically paid in advance. The buyer reimburses the seller for the portion pre-paid for the period after settlement. Rent (for investment properties) If the property is tenanted: Rent is apportioned so the seller receives income up to settlement. The buyer receives rent from the settlement date onward. How Adjustments Work (Easy Example) Let’s say: Settlement is 15 June Seller already paid council rates until 30 June That means: Seller paid for 15 extra days they won’t own the property Buyer pays them back for those 15 days So everything stays fair. Why Adjustments Matter Settlement adjustments ensure: Fairness between buyer and seller No double payments or unpaid liabilities A clean financial break at settlement Without adjustments, one party would end up covering costs for a period they didn’t benefit from. Who Calculates the Adjustments? In NSW, adjustments are usually prepared by: The buyer’s conveyancer Reviewed and agreed upon by the seller’s legal representative They are included in a document often called the settlement statement or adjustment sheet. Tips for Buyers and Sellers: For Buyers: Budget for adjustments on top of the purchase price Review the settlement statement carefully before settlement For Sellers: Ensure all rates and levies are paid up to date Keep records of payments to avoid disputes Settlement adjustments might seem technical, but they’re simply about splitting costs fairly based on time of ownership. Once you understand the logic behind them, the numbers on your settlement statement will make much more sense. If you’re unsure about any figures, don’t hesitate to ask your conveyancer, they deal with these calculations every day and can walk you through them step by step. Understanding this part of the process puts you in a stronger position, whether you’re buying your first home or selling an investment property in NSW. 📞 Get in touch with Coutts today to start your buying/selling process with clarity. Schedule an Appointment Now Common FAQs 📌 Do buyers pay settlement adjustments on top of the purchase price?Yes. Buyers usually reimburse the seller for prepaid costs such as council rates, water charges, or strata levies relating to the period after settlement. 📌 Who calculates settlement adjustments?Settlement adjustments are typically prepared by the buyer’s conveyancer and reviewed by the seller’s legal representative before settlement. 📌 Are settlement adjustments normal in NSW property transactions?Yes. Settlement adjustments are a standard part of almost every property transaction in NSW. ABOUT KAY VITOGIANNIS: Kay joined the Coutts team in May 2021 working as a Licensed Conveyancer within our Property & Conveyancing team, based in our Narellan office. Kay has over 20 years of experience in the Legal industry. She began her journey in CBD Conveyancing firms as a secretary and attained her Advanced Diploma in Conveyancing in December 2010. For further information please don’t hesitate to contact: Kay Vitogiannis Licensed Conveyancer info@couttslegal.com.au 1300 268 887 Contact Coutts today. This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you. Contact Us