How is rent adjusted on the statement of adjustments when buying a rental property in Ontario?

When you purchase an income property in Ontario that has existing tenants, rent received by the seller for the period after the closing date must be adjusted on the statement of adjustments. Rent is typically paid at the beginning of the month, so if closing occurs mid-month, the seller will have collected rent for days they no longer own the property.

The adjustment credits the buyer for the unused portion of rent. For example, if closing is on the 16th of a 30-day month, the seller collected rent for the full month but owns the property for only the first half. The buyer receives a credit for approximately half a month's rent for each tenanted unit, to be paid from the seller's proceeds.

The statement of adjustments will list each rental unit, the monthly rent, and the per diem calculation. Your lawyer will verify the rent rolls — the list of units, tenants, and rent amounts — and ensure the adjustment matches the actual rents collected. You should also receive any tenant damage deposits (last month's rent deposits in Ontario) as credits, since those are funds you now hold on behalf of tenants. Your lawyer will ensure deposits and rent are properly accounted for.