This unassuming statement of adjustments form is the financial heartbeat of your real estate deal. As a standard part of the closing process, it comes into play whether buying or selling a home. Understanding how a statement of adjustments works in Ontario can be the difference between “smooth closing” and “surprise goose eggs.” It may seem like a small detail, but it is worth a little bit of a deep dive.
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What Is a Statement of Adjustments?
A statement of adjustments is a detailed, lawyer-prepared ledger that balances the books between the buyer and seller. Think of it as your real estate version of a bank statement with credits and debits lined up to show exactly who owes what on closing day. In Ontario, it’s typically drafted by the seller’s lawyer and delivered to the buyer’s lawyer shortly before the last day set for examining title or “Adjustment Day.”
Why is it so important? Because it ensures neither side overpays or underpays for things like prepaid property taxes, utilities, condo fees, or deposits.
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How Does It Work?
Every statement of adjustments shows two columns —credits and debits —and ends with the magic number: cash to close. Here are the usual suspects:
- Purchase Price– the starting point of your transaction
- Deposit – credited back to the buyer so it isn’t collected twice
- Prepaid Items- property taxes, utilities or condo fees the seller paid ahead of the adjustment date
- Outstanding Items– amounts the buyer must reimburse for services used before closing, like a prorated tax bill
After the math, the final figure shows how much the buyer needs to bring or how much the seller will receive. That’s the number your bank and lawyer care about.
Statement of Adjustments Example
Let’s make it real. Suppose you’re buying a $400 000 condo with a July 1 adjustment date:
- Purchase Price: $400 000
- Deposit Paid by Buyer: $50 000r
- Prepaid Property Taxes: $1 795 (seller paid the full year; buyer reimburses for July-December)
- Prepaid Condo Fees: $300
Add the credits (purchase price plus prepaid items) and subtract the deposit; the buyer owes approximately $352,095 on the adjustment date. That’s their cash to close (plus legal fees and land transfer tax).
A big picture understanding of how real estate works can make for a streamline transaction. You’ll gain deep insights in the post below:
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Buyer vs. Seller: Who Pays for What?
Buyers pay the purchase price, reimburse the seller for prepaid items and cover land transfer tax and other closing costs. Your lawyer will also prepare a trust ledger that shows where your down payment and mortgage funds are allocated.
Sellers get credited for the sale price and any prepaid expenses the buyer must reimburse. Their debits include any unpaid taxes, utilities and real estate commissions. The net after expenses is what the seller walks away with.
Adjustment Date: The Line in the Sand
All adjustments are calculated to the closing day: the seller pays up to that date, and the buyer pays from the day after. For example, if the closing is September 1, property taxes are prorated so the seller covers January 1 to August 31 and the buyer covers September onward. No free days. No overpaying for someone else’s cable bill.
Why Care About This Stuff?
In Ontario real estate, transparency and fairness matter. A well‑prepared statement of adjustments protects the buyer from paying for services they didn’t use and ensures the seller isn’t short‑changed. It’s also a reality check as you’ll see exactly where every dollar goes so you can budget for closing with confidence.
Pro Tips From The Weeks Group
Review Early: You’ll usually see the statement a number of days before closing. Review it quickly so there’s time to fix any errors.
- Ask Questions: Confused about a line item? Your lawyer or agent can explain it. Don’t be shy.
- Remember Deposits: Your deposit is credited back; it isn’t an extra cost.
- Plan for Closing Costs: There will be extras like land transfer tax, title insurance and legal fees, so budget accordingly.
Are you planning to buy a house in Barrie or elsewhere in Simcoe County? The posts below can help:
No Mysteries On Closing Day
A statement of adjustments might not be as thrilling as a bidding war, but it’s the document that keeps everyone honest. By the time you sign on that adjustment date, every line item will be accounted for and your cash to close won’t be a mystery.
At The Weeks Group, we help you decode it, spot errors and avoid those last-minute surprises. Because in our world, “sold” should come with a side of clarity.
Whatever your next steps may be, our Barrie real estate agents are happy to help. Reach out to us today at 705.305.4174 or email hello@weeksgroup.ca to begin a conversation.
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