A statement of adjustments is the ledger reconciling the purchase price against your deposit, prepaid property taxes and every other credit and charge, producing the balance due on closing. On an $800,000 Toronto condo with $40,000 down as a deposit, that balance is typically $60,000 to $65,000 once land transfer tax and legal costs are added.
The document that decides what you owe
Everything else in your transaction is an estimate until the title="The document reconciling the purchase price against the deposit, prepaid taxes, and every other credit and charge, to arrive at the balance due on closing.">statement of adjustments arrives. It is a two-column ledger. On one side, amounts charged to you. On the other, amounts credited to you. The difference is the balance due on closing, and it is the number your lawyer will ask you to produce.
What appears as a charge
The purchase price sits at the top. Below it, anything the seller has already paid that covers a period after you take ownership.
The most common is property tax. If the seller paid the full year in advance and you close on 1 July, you are reimbursing them for roughly half the year. On a $5,400 annual tax bill that is about $2,700 added to your side.
On a new build, this section grows considerably. Development and education levies, Tarion enrolment, utility and meter connections, and a Law Society levy all appear here. These are set out in your agreement of purchase and sale, and some of them may be capped. Reading that cap before you waive conditions is the single most valuable hour a lawyer will spend on your file.
What appears as a credit
Your deposit is the big one. It was paid to the listing brokerage when your offer was accepted, and it comes straight off what you owe. It is not an additional cost, and buyers who forget this consistently overestimate what they need on closing day.
The mortgage advance is the other. Note carefully what your lender actually sends. If you are paying mortgage default insurance, the premium is added to your loan balance but is not advanced to your lawyer in cash. If you are borrowing from a private or B-lender, the lender and broker fees are usually deducted from the advance before it leaves, so your lawyer receives less than the face amount of the mortgage.
The lines that catch people out
Three items surprise buyers with reliable frequency.
The provincial sales tax on your mortgage insurance premium is payable in cash. The premium itself gets capitalised into the loan. The tax on it does not. On a $23,760 premium in Ontario, that is a $1,900 cheque you were not expecting.
Rental items are the second. If the hot water tank, furnace or water softener is under a rental contract rather than owned, you either assume the contract or the seller buys it out and charges you. Buyouts on HVAC equipment can run into thousands.
Per diem interest is the third, and only applies if the closing date has passed. Interest runs on the unpaid balance at the rate set out in your agreement.
Check it against your own numbers
Do not take the statement on faith. Recalculate the property tax adjustment yourself: annual tax divided by 365, multiplied by the number of days from your closing date to the end of the paid period. Compare the total against what you budgeted.
If the two figures differ by more than a few hundred dollars, ask your lawyer to walk you through the gap before closing rather than on the day.
Work out your number
Put your own figures in and get a full statement of adjustments.
Common questions
Who prepares the statement of adjustments?
The seller's lawyer prepares it and sends it to your lawyer for review, usually a few days before closing. On a new build, the builder's lawyer prepares it.
When will I see my statement of adjustments?
Usually two to five business days before closing. If you have not seen it 48 hours out, ask your lawyer, because it determines exactly how much money you need to send.
Can the numbers change after I get it?
Yes. Revised statements are common, particularly on new builds where levies and utility hookups get finalised late.
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