What are 'adjustments' on a new-construction closing and why do I owe extra money?

When you close on a new-construction home in Ontario, the final amount you pay is rarely exactly the purchase price. The builder's lawyer prepares a Statement of Adjustments — a document that credits and debits various amounts between buyer and builder to arrive at the true balance due on closing.

Common adjustments include: utility connections and meter installation fees; development charges that have changed since signing; prepaid property taxes (if the builder has paid taxes in advance); Tarion enrolment fees; and municipal levies that were not fixed at the time of signing. Some builders also charge for extras such as tree planting, grading deposits, or road maintenance fees.

Your purchase agreement should list which adjustments are capped and which are open-ended. Uncapped adjustments are a known risk in new-construction deals — development charges, for example, can increase substantially between signing and closing, and some agreements pass that increase entirely to the buyer.

Review the adjustments section of your agreement carefully before signing and ask your lawyer to estimate the range of possible additional costs. Budgeting only the stated purchase price, HST, and standard closing costs can lead to a significant shortfall on closing day.