Most home buyers spend weeks agonizing over the purchase price. They negotiate hard, compare comparables, and fight for every dollar. Then, on closing day, they receive a document called the statement of adjustments — a detailed financial accounting of everything owed and everything credited in the transaction — and read it for the first time.
This is backwards. The statement of adjustments is one of the most financially consequential documents in a real estate closing. Understanding it before closing day — and knowing what to check — is part of being a prepared buyer.
What a Statement of Adjustments Is
The statement of adjustments is prepared by the seller’s lawyer and reviewed by the buyer’s lawyer. It reconciles all the financial items associated with the closing: the purchase price, the deposit paid, adjustments for prepaid and outstanding expenses, HST implications, and any other items specific to the transaction.
Think of it as the final scorecard of the transaction. It tells the buyer exactly how much money needs to be brought to the closing — the ‘balance due on closing’ — after accounting for the deposit already paid and all the adjustments.
The Key Components of a Statement of Adjustments
Purchase Price
The starting point. This is the agreed-upon price from the APS. It is listed at the top as a credit to the seller.
Deposit
The deposit paid by the buyer when the offer was accepted is credited against the purchase price. This reduces the balance the buyer owes at closing.
Property Tax Adjustments
Property taxes are typically paid in two instalments. If the seller has prepaid property taxes that cover a period after closing, the buyer reimburses the seller for the prepaid portion. If taxes are outstanding (the seller has not yet paid for a period they occupied the property), the seller’s share is credited to the buyer.
Property tax adjustments are one of the most common sources of error in a statement of adjustments — particularly when the final tax amount for the year is not yet set (this happens often in early-year closings). Your lawyer will review the adjustment to make sure the numbers are based on accurate data.
Prepaid Utilities and Maintenance
If the seller has prepaid items like fuel oil or condo maintenance fees that cover a period after closing, those amounts are adjusted in the seller’s favour. Conversely, if the seller has outstanding obligations, they are credited to the buyer.
HST Implications
For most resale residential properties, the sale is not subject to HST. But there are exceptions: new construction, substantially renovated properties, and properties that were used primarily for commercial purposes may carry HST obligations. Your lawyer will confirm whether HST applies and ensure it is properly reflected on the statement of adjustments.
Condo-Specific Adjustments
If you are purchasing a condominium, the statement of adjustments will include an adjustment for prepaid common expenses (maintenance fees). If the seller has paid the current month’s maintenance fee, you owe them a credit for the portion after your closing date.
The Balance Due on Closing
At the bottom of the statement of adjustments is the balance due on closing — the amount you need to bring to the transaction on closing day, after accounting for the deposit and all adjustments. This is the number your lawyer will communicate to you in advance so you can arrange the funds.
A common mistake buyers make is confusing the balance due on closing with the total closing costs. The balance on the statement of adjustments covers the purchase price (net of deposit) and property adjustments — but your total closing-day costs also include:
- Land transfer tax (Ontario, and municipal if in Toronto)
- Legal fees and disbursements
- Title insurance premium
- Any other costs specific to your transaction
Your lawyer will provide you with a comprehensive closing cost estimate well before closing day so you can prepare the right amount.
When Something on the Statement of Adjustments Is Wrong
Errors on statements of adjustments are more common than buyers realize. They range from minor arithmetic errors to significant miscalculations of property tax adjustments. Your real estate lawyer reviews the statement of adjustments prepared by the seller’s lawyer and will raise any issues before closing.
If you receive a statement of adjustments that you want to understand directly, ask your lawyer to walk you through it line by line. You are entitled to understand every item on the document. If something looks wrong — an adjustment amount that seems too high, a credit you expected that is missing — flag it immediately. Do not wait until you are sitting at the closing table.
The Seller’s Statement of Adjustments
The seller also receives a statement of adjustments — one that shows the proceeds of sale from their perspective. For a seller, the statement deducts the outstanding mortgage balance (which the seller’s lawyer discharges from the sale proceeds), legal fees, real estate agent commissions (if the brokerage is being paid from the proceeds), and any credits owed to the buyer. What remains is the seller’s net proceeds.
Sellers sometimes express surprise at how much comes off the top. Understanding the statement of adjustments in advance of closing prevents those surprises.
Digital Closings and Electronic Funds
Ontario real estate closings are conducted electronically through the Teraview land registry system. Funds are transferred by electronic payment — either by bank draft, certified cheque, or increasingly through real-time payment systems like large-value wire transfers. Your lawyer will tell you exactly what form of payment to arrange and when to have it ready.
Do not arrange funds at the last minute. Your lawyer needs cleared funds in their trust account by the time the registration happens — and delays in funds can delay registration, which can delay possession.
Final Thoughts
The statement of adjustments is not fine print. It is the financial heartbeat of your closing. Ask your lawyer for a draft statement of adjustments a few days before your closing date. Review it. Ask questions. Know how much money you need and where it comes from. Closing day should be a day of celebration — and it is much easier to celebrate when the numbers are exactly what you expected.
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Goldstone Law Professional Corporation serves clients across Mississauga, Brampton, Oakville, and the greater GTA in real estate, corporate, estate, and mortgage law. Whether you are buying your first home, structuring a business deal, or planning your estate, our team provides the clear, practical legal guidance you need.
Visit goldstonelawpc.com or call us at 905-595-9917. We are located at 201-186 Robert Speck Parkway, Mississauga, ON L4Z 3G1.
Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified Ontario lawyer.
This article is provided for general information only and does not constitute legal advice. For advice about your specific situation, please contact Goldstone Law PC directly.