Statement of Adjustments Explained: What Ontario Buyers and Sellers Need to Know

If you have ever been surprised by the final number your lawyer asks you to wire on closing day, you are not alone. The statement of adjustments is the document that reconciles every financial item between buyer and seller — and it almost always means the balance due at closing differs from the purchase price on the agreement of purchase and sale. Understanding what it contains, and why, removes a lot of last-minute stress.

This guide walks through the statement of adjustments in plain language for Ontario residential real estate transactions.

What Is a Statement of Adjustments?

A statement of adjustments (sometimes called the "statement of account" on the buyer's side) is a formal accounting document prepared by the seller's lawyer. It lists every credit and debit between buyer and seller as of the agreed possession date, then produces a net figure: the exact amount the buyer must deliver to complete the transaction.

The document is exchanged between lawyers — usually two or three business days before closing — so both sides can review the numbers, raise any errors, and prepare the certified funds or wire transfer.

How the Statement Works: Credits and Debits

Think of the statement as a two-column ledger. One column is credited to the seller; the other is credited to the buyer (which is effectively a deduction from what the buyer owes).

Seller's credits (what increases what the buyer must pay)

• Purchase price — the agreed sale price is always the starting point on the seller's side.
• Prepaid property taxes — if the seller paid property tax for a period that extends past the closing date, they are reimbursed for those prepaid days (see below).
• Prepaid condo fees or maintenance fees — same logic: if the seller paid the month's common expense fee and possession falls mid-month, the unused portion is a seller credit.
• Fuel or utility deposits that transfer with the property.

Buyer's credits (what reduces what the buyer must pay)

• Deposit — the deposit you paid when you signed the agreement is credited back on the buyer's side.
• Arrears of property tax — if the seller has not yet paid property taxes for days they owned the property, the buyer gets a credit for that period.
• Arrears of condo fees — same principle for unpaid maintenance fees.
• Arrears of utilities — less common, but sometimes included if utilities are billed in arrears and the parties agree to adjust.

Property Tax Adjustments in Detail

Property taxes in Ontario are typically billed by municipalities in two or more installments across the year, often in arrears or in advance — it varies by municipality. Because of this, the closing date almost never falls on a date when taxes are perfectly current.

Prepaid scenario: The seller paid the full summer installment, but possession transfers on May 15. The seller has prepaid taxes for May 15 through the end of the installment period. The buyer gets that property for the rest of the period, so a credit is given to the seller for the days the buyer will "use."

Arrears scenario: The seller has not yet paid the current installment because it is not yet due. The seller has "consumed" days of municipal services without paying. The buyer receives a credit to cover those days.

The exact per-diem calculation is: annual tax amount ÷ 365 × number of days. Your lawyer will pull the tax certificate from the municipality to confirm the current year's assessed amount.

As of writing: tax rates and billing cycles vary by municipality and change annually. Always verify the current figures with your lawyer before closing.

Condo Fee and Utility Adjustments

For condominium purchases, monthly maintenance (common expense) fees are almost always prepaid — meaning the seller paid for the month before it begins. If closing is on the 10th, the buyer gets the condo for days 10 through 30 (or 31), so the seller receives a per-diem credit for those remaining days.

Utilities (water, heat, hydro) are usually adjusted only when they are billed directly to the property rather than the individual. More commonly, sellers are required to provide a final meter read and settle utility accounts in their own names; the adjustment on the statement then covers only amounts confirmed as owing at closing.

The Net Balance Due: What Actually Gets Wired

Once all credits and debits are tallied:

``` Purchase Price + Seller credits (prepaid tax, prepaid condo fees, etc.) − Buyer credits (deposit, arrears, etc.) = Adjusted Balance Due on Closing ```

That figure — not the purchase price — is what the buyer's lawyer must have in trust before keys are released. Because of this, you should never assume the wire amount is simply "purchase price minus deposit."

Common Errors and Disputes on the Statement

• Wrong tax year or wrong installment amount — always cross-check against the actual tax bill.
• Condo fee based on a stale schedule — fees may have changed after the agreement was signed; confirm with the condo corporation's status certificate.
• Missed HST adjustment — new homes and substantially renovated properties may attract HST; the statement may include HST rebate assignments. This is a separate but related calculation.
• Possession time vs. calendar date — if possession is 12:00 noon, confirm with your lawyer whether the adjustment date is the closing day or the following day, per the agreement.

Frequently asked questions