Pro & contra settlement
A pro & contra settlement is the proportionate allocation of running costs and income on a property as at the handover date. The seller pays for the period up to handover, the buyer for the period after, and the settlement is balanced as an addition to or a deduction from the purchase price. It sounds like an accounting exercise, but it is a completely routine part of a property settlement.
The reason is simple: municipal fees, shared costs, property tax, any rent from tenants, insurance and electricity subscriptions are invoiced for whole periods (quarter, half year, year) that rarely line up with the handover date. If the seller has prepaid a full quarter of municipal fees and handover takes place in the middle of that period, the buyer must reimburse the seller for the part that falls after handover. The reverse also applies: if an unpaid invoice arrives covering time before handover, the seller must pay their share. The allocation is called pro & contra because it runs both "for" (the buyer owes the seller) and "contra" (the seller owes the buyer).
In practice, the settlement is prepared by the settlement agent, normally a broker or a solicitor, based on documentation of the actual amounts. The most common items:
- Municipal fees (water, sewerage, waste collection, chimney sweeping), the records sit in the municipality's invoice archive.
- Property tax where it is levied, the instalment amount divided by days.
- Shared costs in a borettslag (housing co-operative) or owner section sameie (joint ownership), checked against the managing agent.
- Rent from any tenants, paid or due for the current period.
- Insurance where the policy follows the property (unusual in residential sales, more common in commercial buildings).
- Any electricity costs, internet and other subscriptions where handover assumes that the seller cancels and the buyer signs up anew.
The time basis is calendar days. A full year gives 365 (or 366) days, a quarter 90 to 92 days. The amount for each item is spread linearly: a prepaid municipal fee of 12,000 kroner for the year, with handover on 1 July, gives 6,000 kroner in reimbursement from the buyer to the seller. The broker adds up the items, balances the pluses and minuses, and the result forms an addition to or a deduction from the purchase price that is paid together with the remaining settlement. The pro & contra settlement is therefore not a separate payment demand, but a correction to the final settlement.
For commercial property and rented buildings the settlement becomes more complex: rental income and shared costs from tenants must also be allocated, and the calculation often takes in operating and maintenance contracts, the property tax instalment, reimbursement of electricity and other consumption-based costs. It is not unusual for a commercial property transaction to have 15 to 30 settlement lines, and disputes arise when the supporting documentation is missing. The standard agreements from Norsk Eiendom and Forum for Næringsmeglere include their own pro & contra templates that each party can use as a starting point.
The pro & contra settlement must not be confused with purchase costs. Purchase costs are the buyer's expenses for document duty, the land registration fee and the mortgage deed. Pro & contra is the periodisation of running costs. Both form part of the final settlement, but they are calculated independently of each other.
From Placepoint's dictionary: Pro & contra settlement
More information: Forbrukerrådet: Kjøp og salg av bolig, Lovdata: Avhendingslova, Norsk Eiendom: Standardkontrakter
English: Pro-contra settlement (proration of running costs at closing).
Common questions
What is a pro & contra settlement?
A proportionate allocation of running costs and income as at the handover date. The seller covers the time before handover, the buyer the time after, and the difference is added to or deducted from the purchase price in the final settlement.
Which items are included in the pro & contra settlement?
Municipal fees, property tax, shared costs in a borettslag or sameie, prepaid or due rent, and any insurance or fixed subscriptions that follow the property. For commercial buildings, running operating costs and rental income are included as well.
Who prepares the pro & contra settlement?
The estate agent or the settlement solicitor. In a private sale without a broker, the buyer and seller must draw up the calculation themselves, often with help from a property solicitor. The supporting documentation comes from the municipality, the managing agent and the suppliers.
Is a pro & contra settlement the same as purchase costs?
No. Purchase costs are the buyer's expenses for document duty, the land registration fee and the mortgage deed. The pro & contra settlement concerns the periodisation of running costs on the property itself. Both form part of the final settlement, but they are calculated separately.
What happens if an invoice turns up after handover?
The seller and buyer must then settle it afterwards on the same principle: the cost is allocated proportionately based on the handover date. It is common for the broker to hold back an amount for a short period after handover to catch such late invoices.