In this guide, we explain what a settlement adjustment statement includes, how settlement adjustments in NSW are calculated, and provide worked examples so you know exactly what to expect at settlement.
If you’re buying or selling property in New South Wales, you’ll encounter a settlement adjustment sheet (also called a statement of adjustments) as part of your conveyancing process. This document ensures both buyer and seller pay their fair share of property-related costs, but understanding how it works can be confusing.
A settlement adjustment sheet (also known as a statement of adjustments or settlement adjustment statement) is a financial document prepared during property conveyancing. It lists all the costs that need to be divided between the buyer and seller based on the settlement date.
The purpose is simple: to ensure each party only pays for the time they actually own the property.
Example: If the seller has already paid council rates for the full year but settlement occurs in July, the buyer needs to reimburse the seller for the portion covering July to December (when the buyer will own the property).
In New South Wales, the buyer’s conveyancer or solicitor typically prepares the settlement adjustment sheet. They then send it to the seller’s representative for review and approval before settlement takes place.
A typical NSW settlement adjustment sheet includes adjustments for the following items:
Adjustment Item | Description |
Council Rates | Annual rates charged by the local council. Verified via Section 603 Certificate. |
Water & Sewerage | Access charges (paid quarterly) and usage charges (paid in arrears). May require special meter reading. |
Strata Levies | For units/apartments only. Verified via Section 184 Certificate from the strata manager. |
Land Tax | If applicable. Verified via Section 47 Certificate from Revenue NSW. |
Rent (if tenanted) | Rental income is split between the seller (up to the settlement date) and the buyer (after the settlement date). |
Note: Personal utilities like gas, electricity, and internet are NOT adjusted at settlement. The buyer arranges the connection of these services separately.
To calculate accurate settlement adjustments, your conveyancer will obtain the following official certificates:
The basic formula for settlement adjustment calculations is:
Daily Rate = Annual Cost ÷ 365 (or 366 for leap years)
Adjustment = Daily Rate × Number of Days
The key principle is that the seller pays for costs up to and including the adjustment date (usually the settlement date), and the buyer pays for costs from the day after settlement onwards.
Scenario:
Calculation:
Result: The buyer pays the seller an additional $1,092.28 at settlement to cover the prepaid council rates.
Scenario:
Calculation:
Result: The seller owes $75.00, which is deducted from the amount they receive at settlement.
Understanding settlement adjustments can be confusing, but you don’t have to navigate it alone. Our experienced conveyancing Lawyers handle settlement adjustment calculations every day and can ensure your property transaction runs smoothly.
Whether you’re buying or selling property in NSW, we can prepare or review your settlement adjustment sheet, verify all figures against official certificates, and resolve any discrepancies before settlement day.
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Confusing Adjustments with Additional Charges – Many buyers worry when they see adjustments on their settlement statement, thinking they’re being overcharged. In reality, adjustments simply ensure fair cost-sharing. If the seller prepaid expenses, you reimburse them; if expenses are outstanding, you receive a credit.
Forgetting Special Water Meter Readings – Water usage is charged in arrears, so a special meter reading close to settlement is essential to calculate the seller’s usage accurately. Without this, estimates may be inaccurate.
Overlooking Strata Special Levies – For strata properties, check whether any special levies have been raised or are planned. These should be addressed in the contract and may affect settlement adjustments.
Incorrect Adjustment Date – The adjustment date is usually the settlement date, but this can be varied by contract. Ensure your conveyancer uses the correct date for all calculations.
Conveyancer or property lawyer plays a crucial role in ensuring settlement adjustments are accurate and fair:
A settlement adjustment sheet (also called a statement of adjustments) is a document that calculates how property-related costs like council rates, water charges, and strata levies are divided between the buyer and seller based on the settlement date.
Settlement adjustments are calculated by dividing the annual or quarterly cost by the number of days in that period to get a daily rate. This daily rate is then multiplied by the number of days each party owns the property to determine their share.
In New South Wales, the buyer’s conveyancer or solicitor typically prepares the settlement adjustment sheet. It is then sent to the seller’s representative for review and approval before settlement.
Common adjustments include council rates, water and sewerage charges, strata levies (for units), land tax (if applicable), and rent (for investment properties).
A Section 603 Certificate is an official document from the local council that states the rates and charges levied on a property. It’s used to verify figures for settlement adjustment calculations.
Yes. If you believe the adjustment calculations are incorrect, your conveyancer can raise the issue with the other party before settlement. Discrepancies should be resolved by checking against official certificates.
If the seller has not paid rates or other charges, the adjustment works in the buyer’s favour. The outstanding amount is deducted from the purchase price the seller receives at settlement.
Some conveyancing software includes settlement adjustment calculators, but for accurate figures, you should always rely on your conveyancer. They use official certificates and verified rates to ensure calculations are correct for your specific transaction.
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