What are local improvement charges and how do they appear on a statement of adjustments in Ontario?

Local improvement charges are municipal levies assessed against properties that benefit from specific local infrastructure works — such as sidewalk construction, sewer installation, or road paving in a particular area. They are billed annually over a set number of years and attached to the property rather than to the owner, meaning they can transfer to a new owner.

In an Ontario real estate transaction, outstanding local improvement charges are adjusted on the statement of adjustments. If the seller has outstanding annual installments remaining, the buyer will take on responsibility for future payments, and the seller typically provides a credit for the installments that have already accrued to the date of closing. Alternatively, the parties may agree that the seller will pay off all outstanding charges before closing.

A title search will reveal any local improvement charges registered against the property. Your lawyer will identify them and determine the outstanding balance. The agreement of purchase and sale often includes a clause stating that local improvement rates shall be adjusted, consistent with the standard Ontario APS wording. If there are significant charges remaining, it is worth discussing with your lawyer how they will be handled at closing — whether through adjustment, full payout by the seller, or assumption by the buyer.