Buying or selling real estate in Victoria involves more than just negotiating a price. When settlement day approaches, a host of adjustments are calculated to make sure that both the buyer and the seller pay their fair share of ownership costs. This guide explores everything you need to know about property settlement adjustments—what they are, how they work, who performs them, and how to avoid common pitfalls.

What Are Property Settlement Adjustments?

Settlement adjustments are financial calculations that ensure both parties to a property sale only pay for their respective periods of ownership. Common items include council rates, water usage, owners corporation fees, and rent. These are apportioned on a daily basis based on the settlement date.

Adjustments also include any prepaid or overdue amounts and ensure the vendor is reimbursed where applicable, or the purchaser is protected from unexpected liabilities. They form part of the final disbursement statement and are integral to the legal and financial completion of the transaction.

Why Are They Important?

Without adjustments, a seller might end up paying for services or utilities that the buyer will use, or a buyer might receive rental income without compensating the seller. Adjustments prevent disputes, ensure fairness, and are legally required under the Sale of Land Act 1962 (Vic), the Transfer of Land Act 1958 (Vic), and relevant contractual provisions. They are also central to professional practice under the Conveyancers Act 2006 (Vic).

When correctly prepared, adjustments provide a final clear balance of funds for each party and ensure proper alignment of rights and obligations from midnight on the day of settlement. Inaccuracies or omissions can lead to delays, financial loss, and even litigation.

Who Prepares the Adjustments?

Typically, the buyer’s conveyancer prepares the Statement of Adjustments, using:

Council Rate Certificates
Water and Sewerage Information Statements
Land Tax Certificates (if applicable)
Owners Corporation Certificates
Special meter readings for utilities (if available)

The seller’s conveyancer then reviews and may propose amendments. Lenders also rely on the figures to determine final loan drawdowns and discharges.

How Are Adjustments Calculated?

Adjustments are calculated daily:

Divide annual/quarterly charge by number of days in the period.
Multiply by the number of days for which each party is responsible.
Add any fixed fees or arrears.

For example, if annual council rates are $1,825 and settlement occurs on day 200 of the year, the buyer pays 165/365 of the total back to the seller. This would be approximately $825. Other items like rent or prepaid strata levies are similarly apportioned.

Adjustments are performed using trust accounting software (LEAP, Smokeball, etc.) and entered into the financial settlement statement that is uploaded to PEXA.

Expanded Categories of Adjustment with Detailed Examples

Council Rates

Usually charged by local councils annually or quarterly, council rates fund waste collection, public infrastructure, and community services. If the seller has prepaid rates for the full year, the buyer must reimburse them for the portion beyond the settlement date. For example, on a $2,000 annual rate, if settlement occurs on 1 October, the buyer reimburses for 9 months—approximately $1,500.

Water and Sewerage Charges

These consist of fixed service fees and variable usage charges. A special meter reading close to settlement ensures the usage component is accurate. Fixed fees are adjusted daily. If the seller has not paid the current water bill, the buyer’s conveyancer ensures it is deducted from the settlement funds.

Owners Corporation Fees

Also known as body corporate levies, these apply to strata-titled properties such as apartments or townhouses. These fees cover building insurance, maintenance, and shared utilities. If quarterly levies have been paid in advance, the buyer reimburses the seller for the unused period.

Rent

For investment properties, rental income must be apportioned as part of the adjustment process. If rent is paid monthly and settlement is mid-month, the rent is split by the number of days each party owns the property during that rental period. Always ensure the exact rent amount and cycle is disclosed.

Land Tax

Since 1 January 2024, vendors cannot pass land tax on to purchasers for most residential sales under $10 million. However, in commercial sales or where agreed otherwise (prior to this date), land tax may still be adjusted. The figure is obtained from a land tax certificate issued by the State Revenue Office.

Fire Services Property Levy

Included with council rates, this levy contributes to the CFA and MFB. It is usually incorporated into the council rates certificate and is adjusted alongside general rates.

Waste and Environmental Charges

These include annual hard waste collections, tip passes, or stormwater and drainage levies. Often found on rate notices or as line items on planning and water certificates, they must be reviewed and allocated daily.

Special Rates and Supplementary Notices

If a council has issued a special charge for improvements (e.g., new footpaths), these are disclosed in the Section 32 and adjusted if already billed. Supplementary rates, which reflect recent changes like renovations or rezoning, may also appear unexpectedly. Buyers should confirm the latest valuation and ask about pending notices.

Miscellaneous Adjustments

Depending on the property, further adjustments may include:

Septic tank inspection charges
Grazing licences or irrigation fees (rural properties)
Permit fees (e.g., for planning overlays)
Owner-paid insurance if the policy benefits the buyer

Each of these examples highlights why certificates must be current and examined closely. In the next section, we will look at how these adjustments are timed and integrated into the settlement timeline and why early preparation is key.

Timeline and Process of Adjustments in a Property Transaction

Pre-Contract Stage

Vendor responsibilities: Gather current rate notices and utility bills.
Purchaser considerations: Ask for clarity around any upcoming levies or unusual expenses.

Contract Signing and Exchange

Deposit paid.
Finance application submitted.
Conveyancers formally instructed.

Certificate Ordering

Purchaser’s conveyancer orders the following:
- Land Information Certificate from the local council
- Water Information Statement
- Owners Corporation Certificate (if applicable)
- Land Tax Certificate (if applicable)
- Special meter read requests (for water usage)

Drafting Adjustments

The Statement of Adjustments is drafted using all gathered certificates.
The vendor’s representative reviews and confirms or amends.
The settlement statement is prepared for lender and buyer review.

Final Review (One Week Before Settlement)

Adjustments are finalised.
Lenders review and provide payout/discharge figures.
Final amount due at settlement is calculated.

Day of Settlement

PEXA workspace is completed.
Final figures confirmed and signed off by all parties.
Title is transferred and funds are disbursed.

Post-Settlement

Buyers update contact details with council and water authorities.
Vendors cancel insurance and utilities.
Any follow-up adjustments or reimbursements (e.g., unlisted rent payments) are managed.

Real-Life Case Studies and Common Pitfalls

Case Study 1: The Forgotten Water Bill

Marion sold her Frankston home in late June. The property settled on 15 July. Her conveyancer didn’t request a final water meter reading from South East Water. At settlement, the buyer's representative assumed a flat service fee, but Marion had watered her garden generously in the final month. The buyer received a surprisingly high water bill later and demanded reimbursement. Marion had to negotiate a post-settlement adjustment to keep the peace and avoid escalation.

Lesson: Always include a final water meter reading. Even small omissions can cause disputes post-settlement.

Case Study 2: The Tenanted Investment Property

Raymond bought an apartment in Springvale as an investment. The seller, Paula, had collected rent of $1,600 on the first of the month. Settlement occurred on the 10th. Raymond’s conveyancer properly adjusted the rent and deducted $693.33 from the balance payable at settlement, representing 21 days’ rent to be credited back to Raymond.

Lesson: Rental income must be split according to actual days of entitlement. Both parties should be transparent about tenancy arrangements and payments.

Case Study 3: Regional Rates Rollover

Peter and Janine were buying a property in Gippsland that included a rural fire services levy, waste disposal charges, and a regional water authority fee that wasn’t part of the standard documentation. Their conveyancer identified these early and ensured they were fairly apportioned. The seller had missed these in their disclosure.

Lesson: Regional properties may carry additional fees not found in urban areas. Always request full rate certificates and ask your conveyancer to double-check less common levies.

Case Study 4: The Land Tax Loophole

Maria was buying a $950,000 townhouse in Cheltenham. The seller’s solicitor included a clause adjusting for land tax. Maria’s conveyancer struck out the clause, citing the 2024 prohibition under the State Taxation and Other Acts Amendment Act. The vendor agreed. Maria saved almost $900 in incorrect charges.

Lesson: Stay informed about the latest legislation. Some sellers or agents may be unaware—or hope you are.

Case Study 5: Miscalculated Owners Corporation Fees

A young couple purchased a Docklands apartment. The owners corporation fees had increased mid-year, but the adjustment was calculated on the older, lower rate. The seller’s representative noticed and requested a correction. The couple’s conveyancer reissued the adjustment. Though embarrassing, it was resolved before settlement.

Lesson: Check the most recent invoice. Don’t assume that fees stay the same from one quarter to the next.

Frequently Asked Questions (FAQs)

1. What are property settlement adjustments? They are financial calculations that ensure buyers and sellers pay only for their portion of costs like rates and rent based on the time they owned the property.

2. Who prepares the Statement of Adjustments? Usually the buyer’s conveyancer prepares it and the seller’s conveyancer reviews and approves it.

3. Are adjustments legally required? Yes. They ensure compliance with fairness principles and contract terms under the Sale of Land Act 1962 (Vic).

4. How are rates adjusted? Based on daily ownership. Annual rates are divided by 365 and multiplied by the number of days each party owns the property.

5. What happens if there’s a mistake in adjustments? It can lead to underpayments, overpayments, or disputes. These are hard to fix post-settlement.

6. Is water usage always included in adjustments? Yes, if the water authority provides a final meter reading. Otherwise, an estimate is used.

7. Can sellers pass on land tax to buyers? Not for most residential properties under $10M as of 1 January 2024.

8. What’s included in the rates adjustment? Council charges, fire service levy, waste levy, and any special rates shown on the council certificate.

9. What about rent on a tenanted property? Rent is split according to the days each party owns the property in the rental period.

10. Do utility bills get adjusted? No. Gas, electricity, and internet are personal to the occupant. Each party handles their own accounts.

11. What is a Section 32? Also called a Vendor’s Statement, it discloses all financial and planning information about the property.

12. What is PEXA? PEXA (Property Exchange Australia) is the online platform used for digital property settlements in Victoria.

13. Who signs off on the final adjustment? Both parties’ conveyancers confirm the final numbers before settlement takes place.

14. Can adjustments delay settlement? Yes, if errors are discovered late or documents are missing.

15. Are owners corporation fees always adjusted? Yes, if the property is part of a strata scheme or community title.

16. Can a buyer dispute the adjustment statement? Yes. They should raise concerns before settlement. Afterward, options are limited.

17. Should buyers check the adjustment sheet? Absolutely. It’s critical to confirm the numbers match what’s been paid and disclosed.

18. Are there other hidden charges? Sometimes. It’s essential to check all certificates for unusual or one-off levies.

19. Who pays the mortgage discharge fee? The seller does. It is not adjusted; it's deducted from sale proceeds by the lender.

20. What about insurance? The buyer must take out insurance for the property effective on the settlement date.

21. Are commercial properties different? Yes, they often include GST, lease adjustments, and longer list of operating costs.

22. Do rural properties have extra adjustments? Yes, such as farm rates, irrigation levies, or fencing contributions.

23. Do I need to notify council after settlement? Buyers should confirm their details are updated to avoid future misdirected bills.

24. How are special levies handled? Special rates are adjusted if issued before settlement. If not, the buyer is responsible.

25. What is a supplementary rates notice? Issued for rate changes mid-year due to improvements or reassessment. May affect adjustments.

26. What is a fire services property levy? A charge for fire brigade funding included in council rates and adjusted accordingly.

27. Are there standard adjustment clauses? Most contracts follow Law Institute of Victoria (LIV) standard clauses unless varied.

28. Can I negotiate adjustment terms? Yes, especially in private sales. Make sure your conveyancer drafts it clearly.

29. What happens if settlement is delayed? The adjustment date may shift, affecting the final payable amount.

30. Can rebates or concessions be claimed? Only if the buyer qualifies. Otherwise, adjustment is made on the discounted amount.

31. What is a margin scheme? Used in some property sales to reduce GST liability. Discuss with your accountant.

32. Do adjustments apply to off-the-plan properties? Yes, although timing and figures differ due to longer contract periods.

33. What is an outgoings certificate? Details all amounts due or paid to an owners corporation. Vital for accurate adjustment.

34. What if the vendor hasn’t paid their rates? The buyer’s conveyancer ensures they are deducted from the settlement funds.

35. Who pays the final water bill? The seller pays usage up to settlement. This is calculated from the meter read.

36. What if the property is vacant? It doesn’t change the need for adjustments—rates still apply regardless.

37. Can I settle early to save money? Sometimes, yes. Shorter ownership may reduce your share of annual costs.

38. What is a discharge of mortgage? It’s the formal release of the seller’s home loan, handled by the bank.

39. Can the buyer be penalised for not settling? Yes. Penalties for delay are outlined in the contract and may include interest.

40. What happens to excess payments? They are returned to the seller via the adjustment calculation.

41. How long does settlement take? Usually 30, 60, or 90 days from signing unless agreed otherwise.

42. Can I change the settlement date? Only by mutual agreement and proper documentation.

43. Who releases the deposit? The agent usually holds it in trust until settlement or by written agreement.

44. What is stamp duty and is it adjusted? Stamp duty is paid by the buyer and is not part of the adjustment.

45. What’s a good tip for buyers? Ask for a breakdown of every line on the adjustment sheet. Knowledge is power.

46. Should I keep adjustment documents? Yes. Store them with your title and legal papers.

47. Are foreign owners affected differently? They may have additional surcharges but this doesn’t affect standard adjustments.

48. What about dual occupancy homes? Adjustments may vary if lots are separately titled or share services.

49. What if settlement occurs on a weekend? Settlement will be scheduled for the next business day. Adjustments will reflect this.

50. Where can I get help? Your conveyancer is your best resource. Ask them to explain every document.

Regional vs. Metropolitan Adjustments

Adjustments differ depending on whether the property is in a metropolitan or regional area. These differences impact the types of levies, authorities, and adjustment items that may apply.

Council Rates and Municipal Levies

Metropolitan councils often apply more standardised capital improved value-based rates. Regional councils, by contrast, may include municipal charges, farm differentials, or environmental protection levies. These variations must be considered when apportioning costs.

Water Authorities

In metropolitan areas, water authorities like South East Water or Yarra Valley Water offer standardised billing. In regional areas, smaller or multiple authorities may be involved, and some properties rely on tanks, septic systems, or private bores. Adjustment documents must reflect these variations.

Owners Corporation Differences

Strata schemes are common in Melbourne, requiring adjustments for quarterly fees and sinking funds. In regional townships, standalone homes may have no body corporate or rely on less formal shared arrangements.

Waste Collection

Metropolitan waste is generally included in council rates. In rural areas, private bin contractors or tip passes may be involved. Sellers must disclose how these services are paid for and whether they’ve been pre-paid.

Rural-Specific Levies

Buyers of regional properties may encounter:

Grazing licence fees
Fire break charges
Catchment and irrigation levies
Crown lease rent

These require careful review and should be disclosed in the Vendor Statement.

Land Use and Planning Overlays

Rural properties may have overlays affecting drainage, vegetation, or biodiversity. Metropolitan overlays more often relate to car parking or building heritage. These may not directly affect adjustments but are relevant to disclosure.

Fire Services Levy

Applies state-wide but the classification (residential, commercial, rural) varies, which can change the rate.

Utility Connection

Metropolitan homes generally have standardised access to water, sewer, electricity, and gas. In contrast, rural homes may have off-grid services, solar power, tank water, and bottled gas—all of which may involve unique service fees that should be disclosed and adjusted if relevant.

Understanding these location-based variations ensures that purchasers are aware of ongoing obligations and that vendors comply with their disclosure duties under Victorian law.

Post-Settlement Checklist for Buyers and Sellers

For Buyers

1. Confirm Title Transfer
Ensure your conveyancer has lodged the transfer electronically with Land Use Victoria and that confirmation is received.

2. Insurance Coverage
Your building and contents insurance should be active from the date of settlement. Notify your insurer of completion.

3. Notify Authorities
Follow up with the local council, water authority, and owners corporation (if applicable) to confirm your contact details are updated.

4. Connect Utilities
Arrange gas, electricity, and internet connections in your name. Services should commence on the day of settlement.

5. Owners Corporation Registration
Introduce yourself to the body corporate manager, review the latest financials, and update your postal address.

6. File and Retain Documents
Keep a copy of the Statement of Adjustments, settlement statement, title confirmation, and final invoice from your conveyancer.

7. Forwarding Instructions
Update your postal address with relevant institutions and redirect mail as necessary.

For Sellers

1. Cancel Insurance
Notify your insurance provider to cease coverage from the date of settlement.

2. Utilities Disconnection
Inform your electricity, gas, and internet providers that you are vacating the property and wish to cancel services.

3. Confirm Loan Discharge
Ensure your bank has formally discharged the mortgage. Keep the final discharge statement and payout advice.

4. Review Final Disbursement
Examine the final disbursement provided by your conveyancer. Check all adjusted items are accounted for and balances are accurate.

5. Tax Preparation
If applicable, forward all sale documents to your accountant to determine capital gains or GST implications.

6. Remove Property Access
Ensure all keys, remotes, and security codes are handed over through the agent or as agreed.

7. Provide a Forwarding Address
Leave a forwarding address with the agent or arrange for postal redirection through Australia Post.

Staying proactive during the post-settlement period ensures that both parties meet all remaining legal, financial, and administrative obligations.

Interviews and Insights from Industry Experts

David Dawn – Director Victorian Property Settlements

"One of the most common issues I see is buyers not fully understanding what’s included in their adjustment statement. They look at the bottom number, not realising it includes prepaid council rates, water usage, even rental income. It’s really important for buyers to ask for a breakdown. A five-minute conversation can save a lot of confusion later."

Tom Reardon – Real Estate Agent, Mornington Peninsula

"I always encourage vendors to collect and keep all their property-related bills from the moment they decide to sell. Not just for the adjustment, but to avoid disputes. If a buyer thinks a levy or rate was hidden, it can delay or even derail a settlement. A well-prepared vendor is one step ahead."

Angela Lim – Mortgage Broker, Metro Lending Solutions

"Timing is everything. Many buyers don’t realise that their lender can’t complete settlement until the final Statement of Adjustments is approved. If there’s a mistake or missing document, it can cost them a day’s delay—plus penalty interest. I always tell my clients: be ready early, not just on time."

Greg Maloney – Local Government Rates Officer,

"Every council is different in how we issue rates certificates. In some rural councils, you’ll see annual waste charges, septic maintenance, even animal registration fees. It’s crucial for buyers in these areas to understand the full scope of what they’re inheriting. And vendors need to provide accurate and recent documentation to avoid surprises."

Caitlin Harris – Owners Corporation Manager, OC Connect

"People think owners corporation fees are just about maintenance. But they can include sinking fund contributions, special levies, or legal fees from past disputes. If buyers aren’t aware of these, they’re in for a rude shock. We advise vendors to disclose all minutes from recent meetings. It’s the best way to ensure everyone is clear."

Peter Davison – Property Accountant, Davison & Co.

"For investment properties, adjustments don’t stop at rates and rent. Buyers need to think about depreciation, land tax implications, and apportioning prepaid expenses. The adjustment sheet is just the start of what should be a detailed tax plan. Speak with your accountant as soon as you sign the contract—not after settlement."

Final Summary and Practical Tips

Understand your adjustments early
Ask questions and double-check documentation
Stay informed about legislative changes
Keep all records for future tax and resale
Engage a conveyancer who explains, not just acts

With this knowledge in hand, buyers and sellers can proceed to settlement knowing they’re protected, informed, and financially prepared.

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