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Council rates in Settlement Statement

Discussion in 'The Buying & Selling Process' started by Martinez22, 17th Aug, 2015.

  1. Martinez22

    Martinez22 Well-Known Member

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    Is it normal to pay the full amount owing to the council? Isnt the owner meant to pay a portion? Can someone please clarify this?
     

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  2. Beelzebub

    Beelzebub Well-Known Member

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    Rates are being paid for this financial year 15/16. You and the vendor pay a share depending on how long during this financial year each party held the property.

    As it is early in the financial year you would pay most of the cost as you will own the property for the majority of the year. But the vendor should still pay something.

    Of course, this depends on your contract so I guess you should double check that.
     
  3. Martinez22

    Martinez22 Well-Known Member

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    Oh wow.. that sucks haha but yes, makes sense. Thankyou!
     
  4. JacM

    JacM VIC Buyer's Agent Business Member

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    As Beelzebub has indicated, rates are for the full current financial year. It'd be too much hassle for the conveyancers to be across how often each different council issues interim statements (and also some settlements can occur late which is a hassle if you are mucking about with quarterly council rates and such), so it's just easier to do it for the full year. The vendor should essentially pay a portion of the year and the adjustment that appears on your settlement statement should be indicative of the portion of the year that you will own the property and thus the portion of the year you are essentially responsible for the rates. The conveyancer will pay this directly to council on your behalf, so the next time you'd see a council rates notice for the property would be at the start of the next financial year after settlement.
     
  5. Chilliblue

    Chilliblue Well-Known Member

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    Yes it is normal and I have just done the same.
     
  6. Martinez22

    Martinez22 Well-Known Member

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    This seems like a silly question..
    I am confused as to how much money we need for Settlement.

    We currently have $25,500.
    $19,000 is for the 5% deposit and the rest for settlement. How much more do we need to cover the difference? We will be gifted the rest of the money, just want to specify an exact amount.
     
  7. thatbum

    thatbum Well-Known Member

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    Well do you know how much money you're borrowing exactly? Just put that into your settlement statement
     
  8. JacM

    JacM VIC Buyer's Agent Business Member

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    The easiest way to work it out is compare your settlement statement to your formal loan approval letter.

    The settlement statement shows that amount required to settle is $394,981.38.
    Let's pretend that your formal loan approval letter says that your lender is giving you precisely $350,000.00 (it is important to get the net of costs figure). You would then need to come up with the difference which is $394,981.38-$350,000.00 = $44,981.38

    Note that your settlement letter looks like it's not yet precise but a rough estimate pending more precise figures from council etc.
     
  9. JacM

    JacM VIC Buyer's Agent Business Member

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    Also note that you need to discuss with your legal rep where this money should be located and by when. eg In their trust account or in a specific bank account. You cannot just turn up on the morning of settlement with a suitcase of cash, or EFT or to your legal rep the day before. This is because your legal rep will require time to prepare the settlement cheques in advance of settlement day. Especially if they are using a settlement agent who will probably show up at the crack of dawn on settlement day to pick up the cheques. People cannot be sitting around on settlement day waiting for banks to open to acquire some bank cheques because you were slow to get your money to your legal rep.
     
  10. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    Yes forward paying the rating year is normal for purchases.