What a statement of adjustments is
The statement of adjustments is the closing-day math sheet. It starts with the purchase price, credits the buyer with the deposit, and then adds or subtracts costs that one side paid for the other side’s time as owner. The bottom line is the balance due on closing: the amount the buyer’s lawyer sends to the seller’s lawyer to finish the deal.
On most Ontario resale deals, the seller’s lawyer prepares the statement and sends it to the buyer’s lawyer in the days before closing. It is one step in the wider closing process, and it is where small per-day amounts add up.
A real estate lawyer in Toronto acting for the buyer checks every line against the agreement, the tax certificate, and (for a condo) the status certificate before asking the client for closing funds. Our legal fees start at $2,299 + HST for a purchase and $1,999 + HST for a sale.
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What the agreement says gets adjusted
The adjustments come from the agreement of purchase and sale, not from habit. The standard OREA freehold form (Form 100) says: “Any rents, mortgage interest, realty taxes including local improvement rates and unmetered public or private utility charges and unmetered cost of fuel, as applicable, shall be apportioned and allowed to the day of completion, the day of completion itself to be apportioned to Buyer.”
The OREA condo resale form (Form 101) lists common expenses as well. It also says there is no adjustment for the seller’s share of the condominium corporation’s assets or liabilities, including any reserve or contingency fund the seller paid into.
Two points follow. First, under those standard forms the closing day itself belongs to the buyer, so the buyer carries that day’s share of tax and fees. Second, only the listed items adjust automatically. A repair credit, a price reduction after inspection, or a split of a known special assessment shows up on the statement only if the agreement or a signed amendment says so.
OREA revises its forms from time to time, and clause numbers move. Read the adjustments clause in the version you actually signed, plus any Schedule A terms.
Price, deposit, and the balance due
The first lines are simple. The sale price is a credit to the seller. The deposit is a credit to the buyer, even when a brokerage is holding it in trust rather than either lawyer.
Every adjustment below then nudges the number up or down. The result is the balance due on closing. That figure is not the buyer’s full cheque. Land transfer tax, legal fees, title insurance, and the mortgage advance sit on the buyer’s lawyer’s own trust ledger, not on the statement of adjustments. Our guide to first-time buyer closing costs walks through that wider list.
If you are selling and buying on the same day, the balance due on your sale feeds the funds for your purchase. A late or wrong statement on one side can hold up both. See same-day purchase and sale in Ontario for how lawyers line up a chain.
Property tax: usually the biggest adjustment
Many Ontario municipalities, Toronto included, send an interim tax bill early in the year and a final bill later. Owners then pay in installments, or monthly on a pre-authorized plan.
The seller’s lawyer compares what the seller has actually paid for the year with the seller’s share up to the day before closing. If the seller has paid ahead, the buyer credits the seller for the rest of the year. If the seller is behind, the seller credits the buyer, who will pay the next installments.
Lawyers confirm the figures with a tax certificate from the municipality, not just the seller’s word. When the final bill for the year is not out yet, the adjustment may be based on the interim bill or an estimate. Whether anyone revisits that later depends on the undertakings the lawyers exchange on closing.
The standard OREA form also has a property assessment clause. It says neither side will make a claim for changes in property tax caused by a reassessment, except for taxes that accrued before completion. In Toronto, the tax check also covers Vacant Home Tax charges, which the City can add to the tax roll.
Condo common expenses
Condo fees are usually paid monthly in advance. If the seller has paid the fee for the closing month, the buyer credits the seller for the days from closing to month-end.
The status certificate confirms the monthly common expenses and whether the unit is in arrears. Arrears are cleared from the seller’s side; they should not land on the buyer through the statement.
There is no adjustment for the reserve fund under the standard condo form. A special assessment is different: the form does not split it automatically, so any sharing of installments has to be written into the agreement.
Rent and tenants
When a tenant stays after closing, the buyer becomes the landlord. The rent for the closing month is apportioned. The seller has usually collected that month’s rent already, so the buyer gets credit for the days from closing to month-end.
The buyer also usually gets a credit for the tenant’s last month’s rent deposit, plus any interest owing on it, because the buyer is the one who must apply it at the end of the tenancy. Ontario’s Residential Tenancies Act, 2006 governs rent deposits and the interest landlords pay on them. More on the seller side is in selling a tenanted home in Ontario.
Utilities, fuel, and rental equipment
Metered utilities like hydro and gas are normally closed out with a final meter reading and a final bill to the seller, not a line on the statement. That matches the standard clause, which covers unmetered charges.
Unmetered fuel is different. If the home heats with an owned oil or propane tank, the fuel left in it can be adjusted, because the standard clause lists the unmetered cost of fuel.
A rented hot water tank or furnace usually passes to the buyer as an assumed rental contract, so there is no adjustment unless the deal requires the seller to buy it out. The chattels vs fixtures guide covers how rental equipment is written into an offer.
Checking the statement before closing
The buyer’s lawyer checks that the price and deposit match the agreement and every amendment. The closing date and per-day splits should be right, with the closing day charged to the buyer under the standard forms.
Tax figures should match the tax certificate. Condo fees should match the status certificate. Rent and deposit credits should match the lease and the seller’s rent records. Any negotiated credit should appear exactly as signed.
If the closing date moves, the statement has to be redone, because every per-day figure changes.
Mistakes still happen. Ontario closings commonly include an undertaking from the seller to readjust errors or omissions in the statement of adjustments after closing. The exact wording matters, so if you spot a problem later, raise it with your lawyer rather than the other side directly.
Bottom line
The statement of adjustments decides how much changes hands on closing day. Most lines come straight from the adjustments clause, so know what your agreement says before the statement arrives. If a number looks off, raise it before closing, not after the keys change hands.
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Frequently Asked Questions (FAQ)
Who prepares the statement of adjustments in Ontario?
On most resale deals, the seller’s lawyer prepares it and the buyer’s lawyer reviews it. On a new build, the builder’s side usually prepares it under the builder’s agreement, which can include charges a resale statement never shows. Read the adjustments section of a builder agreement before you sign it.
Is land transfer tax on the statement of adjustments?
No. Land transfer tax is the buyer’s cost and is paid when the transfer is registered. It appears in the buyer’s lawyer’s trust ledger and closing funds request, along with legal fees, title insurance, and the mortgage advance, not on the statement between buyer and seller.
Who pays property tax for the closing day?
Under the standard OREA agreements, the closing day itself is apportioned to the buyer. A custom agreement can say something different, so check the adjustments clause in the version you signed.
What happens if the statement of adjustments is wrong after closing?
Ontario closings commonly include an undertaking from the seller to readjust errors or omissions in the statement after closing. Whether a particular error is covered depends on the wording exchanged on your file. Raise it with your lawyer, who will take it up with the other lawyer.