What’s a statement of adjustments?
Want to avoid closing-day surprises? See exactly who pays what with a statement of adjustments.
Quick answer
A statement of adjustments is the itemized closing statement used in the real estate closing process. It lists credits and debits for buyer and seller so both sides know who owes what on closing day. Think of it as the final math sheet for the transaction.
Why it matters in the closing process
The closing process moves fast. One wrong number costs thousands. The statement of adjustments clears up proration for taxes, utilities, condo fees, and adjustments like deposits, repairs, and HST. No guessing. No surprises.
What a statement of adjustments includes
- Sale price, deposit and net proceeds
- Property tax adjustments (prorated to closing)
- Utility and condo fee adjustments
- Mortgage payoff figures and registration costs
- Brokerage commission and legal fees
- HST or provincial taxes where applicable
- Final cash required from buyer or payable to seller
This document must balance. Every credit to one side is a debit to the other.
How it’s calculated (simple example)
- Start with sale price.
- Subtract deposits already paid.
- Add seller’s outstanding property taxes for the period they owned the year.
- Prorate taxes and utilities from the last billing date to closing date.
- Add closing costs (legal fees, discharge fees, title insurance).
- Result: exact cash to close or exact net to seller.
Example: If taxes for the year are $3,650 and the seller owned the property for 120 of 365 days, the buyer owes the seller a prorated credit: $3,650 x (120/365) = $1,200 (approx.). That $1,200 appears on the statement as a credit to the seller and a debit to the buyer.
Common adjustments to watch
- Property tax proration: usually the biggest adjustment.
- Condo fees: monthly vs quarterly billing can create odd credits.
- Utilities: often estimated; verify final reads.
- Interim occupancy or possession vs closing date differences.
- HST on new builds or certain fees.
Red flags that show a sloppy statement
- Missing deposit credit.
- Double-counted legal or brokerage fees.
- Wrong possession or closing date used for prorations.
- No payoffs for outstanding mortgages or liens.
How to avoid surprises
- Review the statement early and line-by-line.
- Ask your agent or lawyer to explain every line.
- Keep copies of receipts and utility bills.
- Confirm final mortgage payout figure the day before closing.
As a local real estate expert who reviews statements daily, I make sure numbers add up and clients never get surprised on closing day. If you want a fast, clear walkthrough of your statement of adjustments, reach out.
Contact: Tony Sousa — tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
