Settlement adjustment question

[Sandie]

We're settling next week and conveyancer has sent through settlement figures.

We're buying a unit and body corporate fees offer a discount if paid by a certain time. The vendor is in arrears and the conveyancer has not allowed an adjustment for the discounted amount. In this case, we're talking about $270 approx that I have worked out to be our proportion of the discount.

Have spoken to the conveyancer and I get the impression they are not interested in changing it.

It's not our fault that the vendor is behind in their payment - does anyone know if the available discount should be adjusted (pro rata) to the purchasers? Should I press a bit harder?

Thanks in advance...

 

[The Y-man]

Hang on, I'm confused now....

So lets say the BC fee if paid on time is $500.
Other wise it is $1000 (for sake of argument)

You conveyancer is calculating as if the BC fee (you now need to pay) is $500 (not $1000). Is that correct?

Cheers,

The Y-man

 

[Sandie]

Hang on, I'm confused now....

So lets say the BC fee if paid on time is $500.
Other wise it is $1000 (for sake of argument)

You conveyancer is calculating as if the BC fee (you now need to pay) is $500 (not $1000). Is that correct?

Cheers,

The Y-man

Sorry it wasn't clear...

In your example, we are being charged on $1000 and not the $500.

The vendor is in arrears and it appears that the settlement figures are being calculated on the full pre-discounted amount. If so, we are a bit miffed we should have to pay a higher amount because of his arrears.

Does that make more sense?

 

[Perp]

In your example, we are being charged on $1000 and not the $500.

The vendor is in arrears and it appears that the settlement figures are being calculated on the full pre-discounted amount. If so, we are a bit miffed we should have to pay a higher amount because of his arrears.

Look at it this way: the full amount is $1,000. If the vendor had paid on time, he would have received a $500 discount for his behaviour in having paid the bill promptly. In such a case, whether he chose to take up that opportunity is really irrelevant to you; you have to pay based on the actual body corp fees, ie the $1,000. It's really a payment of $1,000 for body corporates, and he had the option to receive a $500 payment if he engaged in the behaviour of paying the bill promptly.

In other words, what I'm saying is that the body corp fees are $1,000. The $500 he could have received as a reward is not really a reduction in body corporate fees, but a reward for an action he could have taken, and nothing to do with you.

Legally, it wouldn't surprise me if it's true that even if he'd paid it early and only had to pay $500, your portion would still be based on the $1,000, because the Court may view that you shouldn't benefit from his early payment.

I take your point, and it would slightly annoy me, but it's really not significant in the big picture.

 

[Sandie]

Thanks for the reply, Ozerp.

If that's so, then we would pick that back up again when we sell.

IF it is done that way consistently, then have no problem with it.

 

[Sandie]

Hmmm I just phoned the council with a different question, but while there I asked if she knew if settlement adjustments are based on the discounted amount or full amount.

She said it was the discounted amount and seemed pretty definite about it. Looks like it is a bit of a grey area...

Although that is rates, I would imagine the same applies to B/corp.

 

[Sandie]

Looks like I have found my answer in clause 2.6 on the REIQ contract and will post here should it be of help someone else. My understanding is as follows:

If the outgoings amount has been paid, then the adjustment is calculated on the actual amount paid.

If it hasn't been paid, then it is adjusted on the full amount payable (excluding any discount).

So, if the vendor has been diligent and paid in time to get the discount, the purchaser benefits. If the vendor is in arrears, the purchaser has to pay the higher amount.

With the benefit of hindsight, a solution could possibly have been negotiated before agreeing to an earlier settlement.

 

[Perp]

With the benefit of hindsight, a solution could possibly have been negotiated before agreeing to an earlier settlement.

Would you really have bothered negotiating on this grounds? Did you count how many light bulbs worked, too, and negotiate that they all be left behind?

Out of interest, is this going to be a PPOR or an IP?

 

[Sandie]

Would you really have bothered negotiating on this grounds? Did you count how many light bulbs worked, too, and negotiate that they all be left behind?

Out of interest, is this going to be a PPOR or an IP?

PPOR, Ozperp...

We feel we have had more than usual dramas with this purchase and a dual authority with the conveyancer hasn't helped one bit - that was one big mistake.

So apologies if it came across as nit picking - was more a statement of frustration. And no - didn't count the light bulbs...