What happens if the property tax bill changes after closing adjustments are made in Ontario?

In Ontario, property tax bills are issued in two phases each year: an interim bill based on the prior year's taxes, and a final bill once the current year's assessment is set. If a real estate closing occurs before the final bill is issued, the property tax adjustment on the statement of adjustments must be estimated using the previous year's amounts or the interim bill.

When this happens, your lawyer will note the adjustment as estimated on the statement of adjustments and indicate that a re-adjustment will occur once the final bill is issued. Once the final tax bill arrives, both parties' lawyers should compare it to what was adjusted at closing. If the final amount is higher or lower than the estimate, one party may owe the other the difference.

In practice, re-adjustments for the difference between estimated and actual property taxes are sometimes not pursued if the difference is small, depending on what the parties' lawyers agreed. However, the right to re-adjust usually exists unless the APS or closing documents specifically waive it. It is worth confirming with your lawyer upfront whether re-adjustment after final billing is expected in your transaction.