Who Pays the Rates? – Selling a Property
Property Rates are due throughout each respective council’s prescribed rating periods. Payment may be made six monthly, four monthly, three monthly or annually.
When selling your property, you are required, at settlement, to pay the rates up to and including the settlement date. In practice, the Vendor will pay the rates to the end of the current rating period and the Purchaser’s share of the rates will be apportioned in the settlement statement and paid to the Vendor by the Purchaser.
If the second instalment is from 1 October 2017 – 31 December 2017 and settlement is on 10 November 2017, the Vendor will commonly pay the rates up until 31 December 2017 prior to or on settlement.
As the Purchaser will have possession of the property from the settlement date onwards, they are required to reimburse the Vendor for the rates from 11 November 2017 – 31 December 2017. This will be reflected in the Vendor’s settlement statement which is given to the Purchaser prior to settlement.
Inheritance – Is it separate property?
Separate property is all property of a spouse/partner that is not required to be equally shared under the Property (Relationships) Act 1976 (“Act”) when a relationship comes to an end. Generally, inheritance is separate property. However, if separate property is intermingled with relationship property (property that must be divided between spouses/partners when the relationship ends) and it is impracticable to treat it as separate property, it is no longer separate property. An example is where inheritance money is used to pay the mortgage on a family home. Accordingly, the inheritance enters the relationship property pool and is divided equally.
A contracting out agreement (“Agreement”) allows couples to determine for themselves the relationship and separate property, rather than relying on the principles of the Act to determine the relationship property and separate property.
Although inheritance may appear to be separate property, to be safe, we recommend entering into an Agreement which defines inheritance as separate property. The Agreement will arguably protect the inheritance from a relationship property claim.
If you need further information about how these two issues may affect you, contact us today.