All Topics / Help Needed! / What happens if vendor has unpaid bills after settlement?

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  • Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    Hi Everyone,

    I've recently purchased an IP and is currently in the settlement stage. My question is, the vendor has a lot of unpaid power, gas, water bills, over due council rates, the list goes on. Ive let my solicitor know about this but what happens if a couple of bills aren't paid after settlement? Have they got the right to chase me for the money as i am the new owner? I'm also concerned that they could cut the power from the property if the bills remain outstanding.

    Any one has any suggestions?

    Joe

    Profile photo of BennyteeBennytee
    Participant
    @ten_burner
    Join Date: 2006
    Post Count: 243

    Hi Joe,

    As the electricity and gas are in the vendors name they will chase it up with him, you cant be liable for these as they are not in your name.
    Any strata fees, council and water rates outstanding are squared up by settlement by the vendors and or taken out of any profit he receives at the settlement, again you wont be out of pocket, this is my understanding, I have delt with a similar situation, my experience was in NSW

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    http://www.austlii.edu.au/au/legis/nsw/consol_act/lga1993182/s713.html

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    Thanks for clearing that up Ten burner, but now that i've read the link that  Terry posted i am confused. From what i can understand the council has the right to sell the land after a certain amount of time? Is this right or have i read it wrong?

    Profile photo of BennyteeBennytee
    Participant
    @ten_burner
    Join Date: 2006
    Post Count: 243

    yes however, you will not settle on the property till this has been sorted, speak with your conveyancer

    Profile photo of WomeninPropMelbWomeninPropMelb
    Member
    @womeninpropmelb
    Join Date: 2008
    Post Count: 234

    Yes, those accounts which affect the title should be taken out at settlement- usually paid by you with the “adjustments”. The accounts not in your name will b e forwarded to the vendor. Probably a reason he is selling – because he cant afford it.
    You should check though once the “adjustments” are taken out- that he has enough to settle- if not – that is if he owes more to the bank and council etc than there is in what you have offered on the property- then you will need to check with your solicitor or conveyancer as to what will happen. The bank or the council will most likely not allow transfer of the title to you until the debts are settled.
    Utilities usually chase person named on the account.

    Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    Thanks for the info everyone. I've spoken to the solicitor and has informed me that before the vendor gets a cents all outstanding bills will be paid for and anything left over will be handing to the vendor. The rates weren't paid for nearly 3 years so it's not a bill i want to receive!

    Profile photo of WomeninPropMelbWomeninPropMelb
    Member
    @womeninpropmelb
    Join Date: 2008
    Post Count: 234

    Great. Good outcome- just be sure what’s left over covers 3 years of rates.
    It is always good to get feedback from here – sometimes its not quite correct but most of the time it is. It is a free advice but you have to do your own to get definitive answers. But sometimes a “professional” person may miss something or may not take quite the same view as others in his profession. Its good to have a different perspective.

    Profile photo of Robert BuggyRobert Buggy
    Member
    @robert-buggy
    Join Date: 2005
    Post Count: 3

    I recently purchased a flat in Melbourne. The settlement day is coming in next week. I found the vendor still owes more than 5k body corp fees. My conveyancer isn't very good. She just generally told me the vendor would draw a cheque to pay it at settlement. I am worried very much. also it is too late to find a new conveyancer. do you guys have any idea I can take to stop the vendor to pass any his liability to me?

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Make sure that your conveyancer orders a meter reading for the water usage, so that any water prior to settlement is not your problem.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of ShellTShellT
    Participant
    @shellt
    Join Date: 2011
    Post Count: 11

    My conveyancer ordered a meter reading for water usage, and did a search for unpaid water bills.

    Then I got my first rates notice as new owner and found I was invoiced for a previous quarters consumption too.

    I called local council who advised that it is now my bill and that they don't chase previous owners.

    I emailed conveyancer and it was sorted out quickly.

    My lesson learned – Read settlement documents VERY thoroughly and don't trust their calculations.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Remember to provide your conveyancer with the current lease and remind him/her to do the rental adjustments (ie get the rent for days beyond settlement day paid to you raither than old owner).  It is also a very good idea to contact the current managing agent, let them know of settlement date and ask that they not pay rents for days beyond that to old owner.  Anything not paid to you at settlement should be held with the managing agent and paid to you.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of kikoerukikoeru
    Participant
    @kikoeru
    Join Date: 2015
    Post Count: 1

    Hi everyone,

    I bought a newly built property this Jan 2015, and got into a situation similar to what described above.

    My conveyancer sorted out a council rate and water rate adjustment fee during settlement, so I paid around $900 during settlement.

    But what I found later in the months is that the vendor did not bother paying off the council rate and water rate. Not even mentioning the incomplete renovations in the house. In the end, because of the council rate and water rate are under my name, my conveyancer recommended me to pay it off myself.

    The vendor is a man that does not keep his words, he said he would help complete the renovation, but he left the job half finished. Then I tried to contact him about the council rate and water rate he didn’t pay off. He never answers my calls, nor my texts. It is so frustrating! My conveyancer said he couldn’t help me much anymore because the vendor is not cooperating.

    What should I do now? It’s unfair because I followed the rules but ended up having to pay double of the rates. The vendor who cheated the system tries to get away… It would be great if you guys can give me some advice regarding what to do next.

    Thanks heaps!

    Kevin

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Kikoeru

    Sounds like your conveyancer messed up. They are supposed to pay outstanding council rates and water rates to the council and water board, and any money left over from the sale then goes to the vendor.

    Chase your conveyancer for compensation and if they don’t cough up, speak to the relevant ombudsman or small claims tribunal.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

Viewing 14 posts - 1 through 14 (of 14 total)

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