Settlement Disbursement Dispute

[TMNT]

Hi everyone, legally im as thick as a phonebook

I settled a property in dec 13,
after a week after settlement I got a 60-90 day overdue notice from the water company

called them up and they said give it a few weeks ,and it should be settled,

fast fwd 3 months, and its still unpaid

conveyancer says they forgot to draw cheques for water

this conveyancer has also stuffed up a friends transaction,

I called the vendors solicitors and they wouldnt tell me much except the arrears has been deducted from their total,

however, when I look at my statement of disbursements, it looks like its been accounted for, how do I check and find out what on earth is going on?????

This is what it says

Council-Rates,charges and leveis $1085.59 Annually
adjusted paid to 30/06/14
Purchaser allows 199 days
an amount of $991.51 has been paid for arrears and interest

(under the purchaser(ME) column there is a figure of $591.87)

Owners Corp $87.50
Quarterly
Adjusted paid to 31/12/2013
Purchaser allowes 18 days

(under the purchaser(ME) column there is a figure of $17.12)

Water Fees $376.97

(under the vendor(THEM) column there is a figure of $376.97)


im trying to find out if there is any dodgy stuff going on here

anyone help me out please?

what a coincidence, conveyancer just called and said they made a mistake and the shortage was taken off the vendor and credited to me but they forgot to draw cheques to the water company, so im not out of pocket, but still have to pay. so how do i check this????

 

[Paul@PFI]

On settlement sometimes if a prior owner has a debt for some services (rates, water etc) the new owner will get a reducing adjustment which appears to make the property cheaper. However the new owner will pay the debt. This is the process adopted uniformly so that the buyer knows that debts are cleared. Makes sense too as if they didnt pay earlier why would they pay if they no longer own it ??

I too had a issue where a instalment of rates was missed in few days prior to settlement. My solicitor went back to the former owners solicitor and requested they settle this immediately. They did and all was OK.

It seems to me you are liable for it. You received the settlement adjustment. The conveyancer failed to account for the payment to water authority.

 

[LexCon]

On the face of what you have said I do not agree with your conveyancer. You have allowed for rates from settlement date to the end of the rateable period. What appears not to have happened is that a cheque should have been drawn from the vendor's funds to pay out any outstanding sum for rates.
Please email me your adjustments and I will tell you conclusively.

 

[Fleur De Lis]

Water Rates

If the amount of $376.97 was posted under "Payable by Vendor" this means that conveyancer made the adjustment e.g. took the money from the vendor before arriving at the final payout figure on the settlement adjustment sheet.

Howevever the final payout figure on the settlement adjustment sheet should be the same figure as the cheque directions. Cheque directions is when they inform you what cheques have to be drawn by you and your bank for settlement.

Ask your conveyancer for the "check directions" (if you don't have them). If the figures do not match for instance if the check directions were $376.97 less than the figure on the settlement adjustment sheet then the amount the vendor owed on water fees was not recouped from him at settlement.

 

[Fleur De Lis]

Water Rates

If the amount of $376.97 was posted under "Payable by Vendor" this means that conveyancer made the adjustment e.g. took the money from the vendor before arriving at the final payout figure on the settlement adjustment sheet.

Howevever the final payout figure on the settlement adjustment sheet should be the same figure as the cheque directions. Cheque directions is when they inform you what cheques have to be drawn by you and your bank for settlement.

Ask your conveyance for the "check directions" (if you don't have them). If the figures do match for instance if the check directions were $376.97 less than the figure on the settlement adjustment sheet then the amount the vendor owed on water fees was not recouped from him at settlement.

If the amount is the same as the figure on the settlement adjustment sheet and a cheque was not drawn for Sydney Water then you overpaid the vendor $376.97

 

[schmick]

TMNT,

Apologies for hi-jacking your thread, however, our unit settled yesterday and I don't quite understand how settlement disbursement was calculated either, albeit I did query with solicitor and he says funds were debited from Vendor's portion which I think is incorrect and I've been left with the bill, which is now paid and up-to-date but also included Vendor's arrears.

My case relates to adjustment of Council Rates and Water. Adjustment date was from 24 March (yesterday) to end of current period.

Vendor's Solicitor's advice to my Solicitor was for us to draw cheques for:

- Sydney City Council, $623.70
- Sydney Water, $786.00

Their attaching Settlement Sheet advice noted:

COUNCIL RATES (UNIT) $907.70 treated as paid for the financial year 1 July 2013 to 30 June 2014. Portion Payable by Purchaser 98/365 or $243.71

COUNCIL RATES (STORAGE CAGE) $257.90 paid for the financial year 1 July 2013 to 30 June 2014. Portion Payable by Purchaser 98/365 or $$69.24

WATER RATES $173.42 treated as paid for the quarter 1 January 2014 to 31 March 2014. Portion Payable by Purchaser 7/90 or $13.49

When I queried my Solicitor (BEFORE SETTLEMENT) he said that this is normal practice and "who keeps their rates paid up to date", WTF!

What I think is an issue is the use of the words 'treated as paid'.

We're talking differences of $310.75 and $772.51 for Rates and Water respectively which to some are insignificant amounts but to us and since I don't feel as though I was getting exception service from our Solicitor, I don't want to be paying a cent extra.

The only amounts that were in the 'Payable by Vendor' column was $104.50 which was for Registration Fees for Discharge of Mortgage.

Looking at the standard NSW Sale Contract, Adjustments, Clause 14.1 states that "Normally, the vendor is entitled to the rents and profits and will be LIABLE for all rates, water, sewerage and drainage service and usage charges, land tax and all other periodic outgoings up to and including the adjustment date AFTER WHICH the purchaser will be entitled and liable".

Not sure how Clause 14.6 is applied here either.

Am I completely mistaken here?

 

[Terry_w]

The vendor pays rates etc up until the time of settlement and you pay thereafter. For some reason the rates etc are paid up to date for the whole of the current billing period at settlement.

So if the rates are $300 for the quartner and the vendor owes $100 for say 30 days out of 3 months of rates then you would pay the other 60 days at settlement or $200.

 

[schmick]

The vendor pays rates etc up until the time of settlement and you pay thereafter.

Terry,

This is where I'm confused because assume rates were paid for the whole period being 1 July 2013 to 30 June 2014 at $907.70 for the period.

UNIT:
Vendor Pays (266/365) to 24 March 2014 or $661.50
Purchaser Pays (98/365) from 24 March to 30 June 2014 or $243.71

I drew a cheque to Sydney City Council for $623.70. Shouldn't this have only been for $243.71 which is my liability from settlement to end of current billing period being 30 June 2014?

 

[Terry_w]

Terry,

This is where I'm confused because assume rates were paid for the whole period being 1 July 2013 to 30 June 2014 at $907.70 for the period.

UNIT:
Vendor Pays (266/365) to 24 March 2014 or $661.50
Purchaser Pays (98/365) from 24 March to 30 June 2014 or $243.71

I drew a cheque to Sydney City Council for $623.70. Shouldn't this have only been for $243.71 which is my liability from settlement to end of current billing period being 30 June 2014?

No, the cheque should be for the whole period. The portions - yours and theirs are taken account in the calculations.

 

[Fleur De Lis]

Adjustment Figures

OOps did I hi-jack a thread yesterday too sorry everyone I am a new member I will have another look at how to use. My apologies too.:

Reading about adjustment figures problems though I am finding it amazing. Under the "Payable by Vendor" column should list "what is" payable by vendor with regard to adjusting the amount for the days. Its like debit and credit in accounting and then you get to the final payout figure owing after these adjustments are made. So if the vendor had paid his council rates to 30th June and it was adjusted as paid to that date you would have owed the vendor for six days rates and that would go under "Payable by Purchaser" column.

As well the Purchaser's Solicitor/Conveyancer has to order from Council and Sydney Water, certificates to show if the vendor is up to date with his rates payments and these certificates will show how much he owes. And these are called S603 and S66 which a purchaser pays for.

These figures and certificates are sent to the vendor's representative with instructions on how much the cheques have to be drawn for the council and water rates to settle the vendor's bill and give you a clean start with regard to the rates.

So adjustments are made as mentioned above with regard to days and a final payout figure is established and the vendor's representative has to take into account the cheques that have to be drawn to pay what vendor owes on rates and then ask the vendor how he wants cheques for the balance of the payout figure drawn after what the vendor owes on rates has been subtracted from the payout figure submitted by the Purchasers representative.

Hope this helps but must say am surprised at amount for Water Rates, would have thought water would have been cut off. Nice to know I don't have to pay my water rates for awhile.

 

[Fleur De Lis]

Adjustment Figures

OOps did I hi-jack a thread yesterday too sorry everyone I am a new member I will have another look at how to use. My apologies too.:

Reading about adjustment figures problems though I am finding it amazing. Under the "Payable by Vendor" column should list "what is" payable by vendor with regard to adjusting the amount for the days. Its like debit and credit in accounting and then you get to the final payout figure owing after these adjustments are made. So if the vendor had paid his council rates to 30th June and it was adjusted as paid to that date you would have owed the vendor for six days rates and that would go under "Payable by Purchaser" column.

As well the Purchaser's Solicitor/Conveyancer has to order from Council and Sydney Water, certificates to show if the vendor is up to date with his rates payments and these certificates will show how much he owes. And these are called S603 and S66 which a purchaser pays for.

These figures and certificates are sent to the vendor's representative with instructions on how much the cheques have to be drawn for the council and water rates to settle the vendor's bill and give you a clean start with regard to the rates.

So adjustments are made as mentioned above with regard to days and a final payout figure is established and the vendor's representative has to take into account the cheques that have to be drawn to pay what vendor owes on rates and then ask the vendor how he wants cheques for the balance of the payout figure drawn after what the vendor owes on rates has been subtracted from the payout figure submitted by the Purchasers representative.

Hope this helps but must say am surprised at amount for Water Rates, would have thought water would have been cut off. Nice to know I don't have to pay my water rates for awhile.