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Everything you need to know about a statement of adjustments

A statement of adjustments is legally required in property transactions to ensure transparency & fairness in the financial aspects of settlement.

Anna Cunningham
Anna Cunningham
Senior Associate, Family Law
March 1, 2024

A statement of adjustments is a financial document commonly used in real estate transactions, particularly during the settlement process. It is prepared by the purchaser’s conveyancer or lawyer and sets out how various rates will be apportioned by the vendor and purchaser based on the number of days each party is occupying the property in a rate period.

What do settlement statements contain?

The statement of adjustments is used to calculate the fair distribution of property-related expenses between the buyer and seller as of the settlement date. It lists various costs and outgoings associated with the property and adjusts them to ensure that the buyer and seller each pay their respective share, based on the ownership period. 

Statement of adjustment preparation

Your property lawyer will generally prepare your statement of adjustments, which includes:

  • Collecting all relevant details, including the contract of sale, loan details for both parties, property details, and personal information of the buyer and seller
  • Calculating adjustments for council rates, water rates, land tax, and body corporate fees (if applicable)
  • Calculating the stamp duty payable by the buyer
  • Detailing loan balances and mortgage discharges, if applicable
  • Listing all payable and receivable amounts

Once the draft is prepared, you and your lawyer should review it carefully for accuracy. Once agreed, the settlement statement is signed by both parties or their representatives prior to the settlement date. 

Common items included in a statement of adjustments

Standard rates that are adjusted at settlement can include:

Council, water, and sewerage rates

These are annual charges that need to be apportioned between the buyer and seller. If the seller has paid these rates for the entire year but is selling partway through the year, the buyer will need to reimburse the seller for the portion of the year they will own the property.

Land tax liability

Similar to council and water rates, land tax is accounted for and adjusted between the parties if applicable.

Owners corporation fees

For properties in a body corporate (like apartments or units), these fees are also adjusted.

Rental payments and security deposits

If the property is an investment property, adjustments for rent already paid by tenants and any security deposits held may be included.

Calculating the final price

The statement of adjustments is used to determine the final amount that the buyer needs to pay at settlement. This includes the property purchase price minus any deposits already paid, plus or minus the adjustments. It is assumed that the vendor has paid in advance for the period. Any rates that have not actually been paid are paid from the funds due to the vendor at settlement to the relevant authorities.

If there are any charges incurred by the vendor in order to provide good title at settlement, such as a discharge of mortgage or withdrawal of caveat, these are adjusted to be the responsibility of the vendor. Further, the PEXA electronic settlement fee is deducted from the amount due to the vendor at settlement.

It is important to note that these amounts are taken from certificates obtained from the relevant authorities. As a vendor, if you pay any amounts close to settlement then please let your lawyer know as this may affect the deducted amounts at settlement.

Who prepares the statement of adjustments?

Typically, the seller’s conveyancer or solicitor prepares the adjustment and settlement statement, which is closely reviewed by the buyer’s legal representative to ensure accuracy. This statement is a legal requirement in property transactions and ensures transparency and fairness in the financial aspects of the settlement.

What if there’s a delay in settlement?

If there is a delay in settlement, penalty interest is applied to compensate for the inconvenience and potential financial loss. It t is charged when either the buyer or the seller fails to meet their obligations by the agreed settlement date. For instance, if the buyer is unable to finalise their financing and delays the settlement, they might be required to pay penalty interest to the seller for the period of the delay. Penalty interest is calculated based on a specific rate, which is often stipulated in the contract of sale. This rate can vary, but it's generally higher than standard interest rates to emphasise its penal nature. The calculation is typically done on a daily basis, starting from the original settlement date until the actual settlement is completed.

Our experienced lawyers have prepared and reviewed many statements of adjustments and are well-versed in conveyancing transactions, representing both the vendor and purchaser. Make an enquiry to speak to a member of our team about your conveyancing or other family law-related needs.

Anna Cunningham
Anna Cunningham
Senior Associate, Family Law

Anna practises exclusively in family law and is experienced in a range of areas, including parenting, property, child support & intervention orders.


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