What is the seller’s statement of adjustments?
Sell Smart: What Is the Seller’s Statement of Adjustments — and Why It Determines Your Final Paycheque When You Close in Milton, ON?
Why you should read this: If you’re selling a home in Milton, Ontario, the seller’s statement of adjustments decides the exact money you receive at closing. Get this wrong and you lose cash. Get this right and you keep more. This guide tells you, in plain language, exactly what it is, how it’s calculated, what to watch for in Milton, and what to do to avoid surprises.
Quick answer — in one line
A seller’s statement of adjustments is the final, itemized accounting that shows credits and debits between buyer and seller on closing day — it prorates taxes, utilities, condo fees, deposits, and other prepayments so both sides pay only what they owe up to the closing date.
Why it matters for Milton home sellers
- Clarity: It translates messy bills into a single number — what you actually receive.
- Accuracy: Municipal taxes (Halton Region/Milton), utilities, condo fees and prepaid items all get split. Mistakes cost you.
- Closing day readiness: Your lawyer uses this statement to finalize funds. If it’s wrong, closing can be delayed.
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Who prepares the statement of adjustments?
Typically the seller’s lawyer (or the buyer’s lawyer) prepares the statement, using figures from your real estate agent, the deposit, mortgage payout amount from your lender, and municipal tax/utility info. Your realtor will usually review it — but it’s the lawyer who certifies the numbers before funds move.
What’s included — line by line
The statement breaks down every item into credits (amounts buyer owes seller) and debits (amounts seller owes buyer). Common items for Milton sellers:
- Sale price (credit to seller)
- Deposit(s) (credit to seller)
- Mortgage payoff (debit to seller)
- Real estate commission (debit to seller)
- Legal fees and disbursements (debit)
- Mortgage discharge fee (debit — check your lender)
- Municipal property taxes (prorated) — based on Halton Region/Milton billing
- Utility adjustments (water, sewer, gas, electricity) — proration to closing date
- Condo common element fees (if applicable) — prorated to closing
- Prepaid items or credits (eg. prepaid property tax installments, vendor-paid repairs)
- Any outstanding special municipal charges or local improvement levies
- Interest adjustments on mortgages or tax arrears
Every item is marked as a debit (taken from the seller) or credit (given to the seller). The net figure is what the seller receives on closing.
How the math works — a simple proration example for Milton
Assume:
- Annual municipal tax bill for the property is $6,000
- Closing date: August 15
- Taxes are paid in full earlier in the year by the seller
Calculation: Daily tax rate = $6,000 / 365 = $16.44 per day. Buyer owns the property from August 15 (closing date) onward, so buyer owes seller for the remainder of the year.
Days buyer owes = days from Aug 15 through Dec 31 = 139 days
Buyer’s share = 139 x $16.44 = $2,286. — This appears as a credit to the seller and a debit to the buyer on the statement of adjustments.
Repeat the same for utilities and condo fees using the billing cycle and actual dates.
Local nuances for Milton sellers — what I see in real deals
- Municipal taxes: Milton falls under the Town of Milton and Halton Region. Tax levies and billing cycles can be municipal or regional. Your lawyer will use the municipal tax year and the most recent tax bill or the municipality’s daily rate.
- Water/Sewer: Some properties in Milton are billed through the Region; some use local utilities or private wells. Confirm which utility bills are active and who pays them.
- Condo units: Condos in Milton often have common element fees billed monthly or quarterly. These are always prorated — ask for the billing frequency early.
- Lender payoffs: Mortgage discharge fees vary by bank. Get a payoff quote from your lender a few days before closing; it expires quickly.
- Property tax refunds/adjustments: If you received a tax rebate or credit earlier in the year, it may still affect proration.
Timing — when you should expect it
- Your lawyer or agent should deliver a draft statement of adjustments at least a few business days before closing. This gives you time to review and flag errors.
- Final statement is signed by lawyers on closing day and attached to closing funds transfer.
If you don’t get a draft early, call your realtor and lawyer. Delays in production are often the main cause of closing hiccups.
How to avoid surprises — checklist for Milton sellers
- Order a mortgage payout statement early (ask your lender for an exact payoff on closing date).
- Provide recent municipal tax notices and utility bills to your lawyer or agent.
- Confirm your deposit amount and where it’s held (brokerage trust). Confirm whether it’s credited to the purchase price.
- Ask for draft statement of adjustments 3–5 business days before closing.
- Check for outstanding local improvement charges, condo special assessments, or other liens.
- Confirm who pays for final water/sewer meter reads and any final utility bills.
- Know your real estate commission and legal fee estimates ahead of time.
Common mistakes sellers make
- Not getting a mortgage payout quote early enough and being surprised by discharge fees or interest adjustments.
- Assuming municipal taxes cover the exact closing split — different municipalities use different billing dates.
- Overlooking condo or HOA special assessments.
- Not confirming where the deposit is held and whether it’s already paid toward the purchase price.
Negotiation point: the closing date
The closing date changes line items. Moving closing a week earlier or later changes the prorations for taxes and utilities. If you can choose a date, pick one that minimizes extra payments (for example: avoid periods right after common fee increases or tax installment dates if it costs you extra).
Who pays what — simple rules
- Property taxes: prorated to closing date (unless sale contract says otherwise).
- Utilities: prorated to closing date.
- Condominium common element fees: prorated.
- Commission, legal fees, mortgage discharge: normally seller’s responsibility.
- Land transfer tax: normally buyer’s responsibility in Ontario.
Practical example — full mini-case
Sale price: $800,000
Deposit: $40,000 (credited to seller)
Mortgage payoff: $400,000
Commission: $28,000 (3.5% + HST example)
Legal fees estimate: $1,500
Municipal tax adjustment (seller prepaid): +$2,286 (credit to seller — buyer pays)
Utilities adjustment: -$150 (seller owes final utility)
Net to seller before other costs: 800,000 – 400,000 – 28,000 – 1,500 + 2,286 – 150 = $372,636
This is a simplified illustration. Final net changes with exact mortgage interest, discharge fees, and lawyer disbursements.
Final steps — what your lawyer will do on closing day
- Confirm funds: buyer’s lawyer transfers funds, seller’s lawyer confirms mortgage payoff and discharges.
- Sign and register deed/transfer: property title moves to buyer.
- Pay registered charges and adjustments: local taxes, utilities, and pay-off amounts.
- Deliver net proceeds to you via bank transfer or certified cheque after clearing.
When to call an expert
Call your real estate lawyer or your realtor if: payoff figures are missing, an unknown lien appears, taxes or levies don’t match the municipal notice, or you haven’t seen a draft statement at least 48–72 hours before closing.
Local action plan — sellers in Milton
- Ask your realtor for a closing checklist specific to Milton. 2. Get a mortgage payout quote 10 business days before closing. 3. Send your recent tax and utility bills to your lawyer. 4. Review the draft statement and confirm differences immediately.
FAQ — Common questions Milton sellers ask
Q: Who creates the seller’s statement of adjustments?
A: Usually the seller’s lawyer prepares it. In some transactions either lawyer may prepare it, but the seller’s lawyer reviews and certifies figures before closing.
Q: Can items be disputed after closing?
A: Minor disputes tied to calculation errors can be corrected post-closing. Major disputes (like undisclosed liens) may require legal action. Get everything checked before signing.
Q: Are property taxes always prorated?
A: Yes, unless the purchase agreement says otherwise. Prorations reflect the actual ownership period up to closing.
Q: Who pays mortgage discharge fees?
A: The seller typically pays mortgage discharge fees and any penalties. These appear as debits on the statement of adjustments.
Q: Does the seller ever pay the buyer’s closing costs?
A: Only if it’s negotiated in the purchase agreement. Standard practice in Milton: buyer pays certain closing costs (like land transfer tax), seller pays commission and mortgage discharge.
Q: When will I get the final net proceeds?
A: On closing day after funds clear and charges are paid. Lawyers usually transfer funds by electronic transfer shortly after registration.
Q: What if my property is a condo?
A: Condo fees and any special assessments are prorated. Ask your lawyer to get the condo corporation ledger or a condo status certificate early.
Q: How do utility bills get handled for properties with private wells or septic?
A: The seller and buyer must agree on handling in the Agreement of Purchase and Sale. Often final reads and adjustments are arranged; ensure it’s in writing.
Bottom line
The seller’s statement of adjustments is not optional — it’s the accounting that turns the sale price into the cash you walk away with. Understand it, get the right documents to your lawyer and realtor early, and review a draft before closing. A little diligence now saves money and stress on closing day.
Need help with your Milton sale? Call or email for a clear closing checklist, a pre-closing review of your statement of adjustments, and local guidance to protect every dollar you’ve earned from your home sale.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
