What is an adjustment statement for closing?
Shocking Question: What is an adjustment statement for closing — and how it can cost Milton sellers thousands if you ignore it?
Quick answer: what an adjustment statement is
An adjustment statement (called a “statement of adjustments” in Ontario) is a math sheet your lawyer or notary prepares before closing. It lists who owes what on the closing date. It prorates taxes, utilities, condo fees, prepaid items, deposits, and any credits or debits that affect the seller’s net proceeds.
In plain terms: it tells you exactly how much money changes hands at closing and why.
Why you should care (and pay attention)
You’re selling a home in Milton, ON. One wrong line on this paper can shave thousands off your cheque. I’ve seen sellers accept numbers without checking — then wonder why their bank deposit is much smaller than expected. This is not paperwork you skim. It’s the final bill.
Be surgical. Know the components. Verify the math. Negotiate the items that can be negotiated.
Who prepares the adjustment statement?
In Ontario sales, the seller’s lawyer or the buyer’s lawyer usually prepares the statement of adjustments. If you use a local real estate lawyer in Milton, they’ll pull the municipal tax info, condo fee ledger (if applicable), and any utility or final bill details to prorate accurately.
Your realtor should review it with you. That’s part of preventing surprises.
What gets adjusted — the checklist every Milton seller must know
- Property taxes: prorated to the closing date. Taxes billed annually, but the charge is for the portion the seller used.
- Utility bills (water, hydro, gas): final readings or flat prorations depending on provider.
- Condo/HOA fees: prorated between seller and buyer. If condo fees are paid in advance by the seller, the buyer reimburses part of it.
- Prepaid expenses: any prepayments or credits at closing get adjusted.
- Rent or income: if the property generates rent or has a tenant, rent is prorated.
- Deposits and holdbacks: final adjustments for deposit usage, repairs, or incomplete items.
- Legal fees and disbursements: often shown but usually handled separately.
Note: Land transfer tax in Ontario is paid by the buyer, not the seller, so it usually doesn’t appear as a seller debit. Toronto has a municipal land transfer tax; Milton does not.
How property tax adjustments work in Milton, ON
Milton’s property taxes are managed through the Town of Milton and Halton Region. Taxes are billed annually but paid in installments. The adjustment uses the most recent tax levy or the estimated annual tax and prorates it day-for-day to the closing date.
Example: If your annual tax is $4,380 and you close on July 1, the buyer owes you the portion of the year from July 1 to December 31. The seller pays taxes up to June 30; the buyer pays from July 1 forward. The statement shows a debit for the seller and a credit for the buyer (or vice versa) so the net balances.
If there’s an outstanding arrears on the property, the adjustment should include that amount. This is why it pays to have a lawyer who pulls a municipal tax certificate.
Real examples — simple math you can use now
Scenario: Sale closes August 15.
- Annual property tax: $3,650
- Seller already paid full year in spring
Days in year: 365
Seller owes tax for Jan 1–Aug 14 = 226 days
Buyer owes tax for Aug 15–Dec 31 = 139 days
Buyer reimburses seller: (139 / 365) * $3,650 = $1,390 (rounded)
On the statement, the seller’s tax debit is $1,390 and the buyer has a credit of $1,390. The seller’s net proceeds increase by that amount.
For condo fees: same math. If condo fee is $360/month and seller paid for the month, buyer reimburses the buyer’s share from closing day.
Common mistakes I see in Milton closings (and how to avoid them)
- Assuming municipal taxes are always up to date. Mist: Missing arrears. Fix: Ask your lawyer for a tax certificate.
- Not checking the condo status certificate. Mist: Hidden special assessments. Fix: Review the condo documents early.
- Ignoring utility final bills. Mist: You pay for days after closing. Fix: Obtain final meter reads and ask for proration.
- Confusing paid vs. accrued items. Mist: Assuming a prepaid item is the buyer’s problem. Fix: Confirm payment timing and prorate properly.
How an experienced Milton realtor and lawyer can save you real money
You need two things: a realtor who knows local quirks and a lawyer who gets municipal records fast. I review the draft statement with sellers line-by-line before funds move. That catches double charges, missing credits, and errors on tax proration.
If a number looks off, we challenge it. If the buyer’s lawyer lists an unusual charge, we demand backup documentation. This aggressive review often recovers hundreds or thousands for sellers.
Timing: when you’ll see the statement and why you must act fast
The statement of adjustments is prepared a few days before closing. Typically you’ll get a draft 1–3 days ahead. Review it immediately. If you wait until closing day, your leverage to correct errors drops dramatically.
Ask questions in writing. Your lawyer should respond with documentation. If something doesn’t add up, escalate it through your realtor.
Negotiation points sellers can use in Milton
- Repairs not done: request a holdback on net proceeds until completed.
- Outstanding municipal work or fines: ensure buyer or seller responsibility is clear in the statement.
- Special assessments (condo): negotiate who pays the portion that applies before closing.
A clear, precise adjustment statement is also a negotiation lever. Use it.
Two real Milton-specific tips that matter
- Development-area properties: If your home is in a newer Milton subdivision, utilities or municipal charges can be atypical. Confirm with the lawyer and the developer’s closing statement.
- Rental properties: If you sell an income property, provide tenant ledgers and confirm rent proration. Milton landlords often have leases tied to calendar months — that must be adjusted precisely.
How to read your adjustment statement — a fast checklist
- Verify the sale price and deposit amounts.
- Confirm the closing date used for proration.
- Check property tax calculation and source of annual tax number.
- Confirm condo fees and any special assessments.
- Review utility adjustments and final meter reads.
- Spot any duplication (e.g., legal fees listed twice).
- Total seller net proceeds: re-calc to confirm.
If any number seems off by more than a few dollars, ask for backup calculations.
Bottom line: this is where the sale becomes real money
The adjustment statement is not paperwork you let pass. It is the final accounting. Read it. Question it. Use it to negotiate. In Milton, ON, local tax quirks, condo rules, and development-area charges make the statement essential.
If you want this handled cleanly and aggressively, I review every draft for my sellers. I’ll find errors, confirm municipal records, and protect your net proceeds.
Contact me for a no-BS review of your statement before closing:
Tony Sousa — Local Milton Realtor
Email: tony@sousasells.ca
Phone: 416-477-2620
Website: https://www.sousasells.ca
FAQ — What Milton sellers ask about adjustment statements
Q: Who pays for the statement of adjustments?
A: The lawyer preparing closing usually includes it as part of their disbursements. The costs are minor and typically billed to the client receiving legal service. The statement itself is standard practice and part of closing costs.
Q: When will I receive the draft statement?
A: Expect a draft 1–3 business days before closing. If your file is complex (rentals, condo, development area), allow a few extra days for accuracy.
Q: What if the final numbers differ from the draft?
A: Small differences happen due to last-minute meter reads or corrected figures. Major differences require immediate challenge. Don’t sign or accept without explanations and documentation.
Q: Are land transfer taxes on the statement for sellers in Milton?
A: No. In Ontario, land transfer tax is the buyer’s cost. Toronto has an additional municipal tax; Milton does not.
Q: How are condo special assessments handled?
A: The statement should prorate the cost. If the assessment was declared before closing and falls partially on the seller’s period, the buyer reimburses the seller for the buyer’s portion. Negotiate responsibility if the assessment was unexpected.
Q: What if the buyer refuses to pay an adjustment I’m owed?
A: Your lawyer can hold back funds or negotiate a settlement. In urgent cases, a written demand or small claims action may be necessary, but most disputes are resolved at closing with legal intervention.
Q: Do I need at closing to pay for any of the buyer’s costs?
A: Generally no. The seller pays closing adjustments that are seller-side (e.g., outstanding tax arrears). Buyers pay their own costs (lawyer fees, land transfer tax). The adjustment statement clarifies this.
Q: Can I review the adjustment statement before hiring a lawyer?
A: You can request a sample or typical breakdown from your realtor to understand the lines, but the official statement is prepared by a lawyer. Hire a lawyer early to avoid last-minute surprises.
Q: How long does it take to resolve an error?
A: Minor math errors are fixed same day. Complex disputes may take days. That’s why you need to review early.
Q: Who should I call if I don’t understand an item?
A: Start with your realtor. If the answer is legal or tax-related, ask your lawyer. I provide line-by-line reviews for sellers in Milton to speed this up.
Want help reviewing your adjustment statement? I’ll read the draft, verify municipal records, and call your lawyer if something is wrong. No panic. Just results.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
