What Is the Statement of Adjustments When Selling a House in Ontario?
The statement of adjustments is the closing-day accounting sheet that shows what you actually receive from the sale. The idea is simple: costs that belong to one side, such as property taxes and utilities, are sorted out between you and the buyer so each of you pays only your share.
Which items appear and how each is split depends on your agreement of purchase and sale, so check every line with your lawyer. Unpaid property taxes are a special lien on the land that ranks ahead of every other claim except the Crown's. If arrears led to a tax arrears certificate on title, anyone can cancel it before the one-year period ends by paying the cancellation price, which covers arrears, current taxes, interest, penalties and reasonable municipal costs.
Your mortgage payout also reduces your proceeds. A closed-mortgage prepayment penalty is usually the higher of three months' interest or the interest rate differential. An open mortgage can be broken without a penalty, but you may still face administration, appraisal, reinvestment and discharge fees, and may have to repay any cash back. If your lender is federally regulated, a federal Code of Conduct requires it to give you a written statement of the calculation when you confirm a prepayment.
Key takeaways
- The statement of adjustments settles costs such as property taxes and utilities between you and the buyer so each side pays only its share.
- Unpaid property taxes are a special lien that ranks ahead of every other claim except the Crown's, and how any arrears are handled at closing is worth confirming with your lawyer.
- Your mortgage payout can reduce your proceeds through a prepayment penalty or other fees, and a federally regulated lender must give a written calculation when you confirm a prepayment.
- The exact items and splits depend on your agreement of purchase and sale, so read every line with your lawyer before closing.