Are Rates payable in advance on settlement?

[Property Meister]

Just been having a an interesting phone communications with council over the past few days,

in a nutshell,

-Settled recently on a property
-Upon settlement, paid rates calculated pro rate from Jan 12-Jun 12
-Yesterday get rates installment notice for Jan-Mar, and a reminder that another one will be coming for Apr-Jun

Called up solicitor/conveyancer whose communication skills so far are non existant,

called up council and they said, sometimes it takes them a few weeks to get the transfers etc. etc. etc. which is fine,

my query is, if the rates had been paid up for the full year, why am I getting installment notices now,
if the rates were paid by installment, why did I have to pay in advance for rates AFTER the settlement date
Wouldnt it be far smarter to work out who owes what ON settlement day and pay it out??? so far I have paid basically all of Jan-Jun 12 on settlement, but now have a rates notice for Jan-Mar in front of me

something smells a bit dodgy

 

[laurencei]

Just been having a an interesting phone communications with council over the past few days,

in a nutshell,

-Settled recently on a property
-Upon settlement, paid rates calculated pro rate from Jan 12-Jun 12
-Yesterday get rates installment notice for Jan-Mar, and a reminder that another one will be coming for Apr-Jun

Called up solicitor/conveyancer whose communication skills so far are non existant,

called up council and they said, sometimes it takes them a few weeks to get the transfers etc. etc. etc. which is fine,

my query is, if the rates had been paid up for the full year, why am I getting installment notices now,
if the rates were paid by installment, why did I have to pay in advance for rates AFTER the settlement date
Wouldnt it be far smarter to work out who owes what ON settlement day and pay it out??? so far I have paid basically all of Jan-Jun 12 on settlement, but now have a rates notice for Jan-Mar in front of me

something smells a bit dodgy

My settlements in NSW all involved paying the council rates until the end of the financial year for the property - so that is pretty normal.

As for council not yet receiving the said funds - thats an issue with your conveyancer.

 

[Property Meister]

My settlements in NSW all involved paying the council rates until the end of the financial year for the property - so that is pretty normal.

As for council not yet receiving the said funds - thats an issue with your conveyancer.

really! that just seems to be a lot of double dipping and time wasting?

so what you are saying is that, you pay the solicitor/conveyancor the rates for your property even though nobody has paid them? and then its their job to pay the council??? seems a lot easier if the person who owes whatever until settlement date pays the person who has paid for it or the council ......

oh well....lawyers

 

[Aaron_C]

There should've been an adjustment made at settlement for the land tax/council rates/water rates that were unpaid at that time by the previous vendor.

 

[DaveM]

It depends on how the vendor has paid their rates, quarterly instalments or annually.

You will pay a pro-rate at settlement of the time remaining in credit to the vendor. Eg if rates are $300pq and you settle 2 months in, you pay the vendor $100 as a credit for the days they paid in advance.

 

[Property Meister]

It depends on how the vendor has paid their rates, quarterly instalments or annually.

You will pay a pro-rate at settlement of the time remaining in credit to the vendor. Eg if rates are $300pq and you settle 2 months in, you pay the vendor $100 as a credit for the days they paid in advance.

EXACTLY what I would have thought,

the odd thing is, since ive received a quarterly rates notice=vendor pays by quarterly and not annually,

however, on settlement, vendor should have paid ME for the days in jan before settlement, SINCE im getting a rates notice for Jan -Mar 2012, however what happened was, the conveyancor/solicitor calculated the amount of rates for Jan, Feb, Mar, Apr, May, Jun, and I had to pay that, which at the time seemed correct, but now seems incorrect since ive got a quartley rates notice in front of me............................confused

 

[marg4000]

You will also be charged extra if the previous owner was in receipt of a pensioner discount and had paid the rates ahead. He will be reimbursed what he paid, but the council will bill the new owner the full amount.
Marg

 

[DaveM]

EXACTLY what I would have thought,

the odd thing is, since ive received a quarterly rates notice=vendor pays by quarterly and not annually,

however, on settlement, vendor should have paid ME for the days in jan before settlement, SINCE im getting a rates notice for Jan -Mar 2012, however what happened was, the conveyancor/solicitor calculated the amount of rates for Jan, Feb, Mar, Apr, May, Jun, and I had to pay that, which at the time seemed correct, but now seems incorrect since ive got a quartley rates notice in front of me............................confused

Sounds like you have a less than competent conveyancer. The section whatever (49?) from council will show rates paid, your conveyancer should have ordered this prior to settlement to calculate the prorate from. Same as water rates and strata levy pro-rates if applicable.

Request they issue an adjustment to the vendors solicitor and see if you can get them to pay it. An honest vendor would, some might tell you to shove it.

My solicitor prepares a settlement schedule which breaks everything down, has all the prorate amounts AND days allowed in the pro-rate, their fees, disbursements, settlement costs etc, all spelled out, with a reconcile against the overall sale figures to show they balance.

 

[Property Meister]

Sounds like you have a less than competent conveyancer. The section whatever (49?) from council will show rates paid, your conveyancer should have ordered this prior to settlement to calculate the prorate from. Same as water rates and strata levy pro-rates if applicable.

yes, defintely the last time I use this guy!!

This is an extract from my "statement of adjustments" from conveyancer

Purchaser allows (days) 162
Adjustments
Municipal Rates
Vendor
0.00
Purchaser
1/7/2011 to 30/6/2012 0.00 424.61
959.31/366 x 162

so ive paid for 162 days, so just under half a year of the rates from settlement date to end of fin year,

and yet im receiving quarterly rates notice, of 1st Jan - End Mar 2012

Just seems really odd, im paying the vendor for fees that I will incur in the future, when vendor has not paid for them (judging by the rates notice)

im just trying to work out if this is protocol, fraud or simply careless

 

[Property Meister]

ok, now im completely and utterly confused after speaking to the council

can someone please clarify what on earth is going on?

this is still over rates and settlement,

according to the council, EVERY council in australia has a date of Feb 28th, so any rates paid for is until this date of every year, so if you pay in one installment, then you are paid up, but if you pay in installments, they are paid up until each quarter,

what happened is that my ive UPFRONT paid from Mid Jan to July 2012 ON Settlement, however I'm getting installment rates notices for Jan-Mar 2012 AND Apr-Jun2012

Council said it was normal to upfront pay for rates until the end of Fin Year, however,in the same sentence, she said, that any overpaid rates should go the vendor/purchaser depending on who owes who,

now thats a complete contradiction and I picked her up on that, until she simply said "go talk to your solicitor"

can someone please explain in laymans terms wth is going on?

 

[smg]

Your rates have been adjsuted from the date of settlement and you have been given an allowance and they would have drawn a cheque for the outstanding balance if any - I would have drawn a cheque for the year and sent it to your council and given all adjsutments accordingly but you pay peanuts you get monkeys instead work with a solicitor these things dont happen! - Its a Section 603/66 by the way ask for a copy of ask your conveyancer to sit down and explain it to you. Thats our practice before we settle to save issues like this. Check with council how much the cheque was for it was probably for water and rates for the year and if no cheque your adjustment was given in your figures.