A statement of adjustments is a financial document that shows the exact amount a buyer must pay the seller on closing day in an Ontario real estate transaction. It accounts for prepaid costs like property taxes and condo fees, ensuring both parties only pay for the days they actually own the property.
The standard Ontario Agreement of Purchase and Sale includes language stating that the balance of the purchase price is payable 'subject to the usual adjustments.' This phrase refers to the prorating of expenses that the seller has already paid beyond the closing date. Your lawyer translates that clause into a line-by-line accounting through the statement of adjustments.
The most common adjustment is property taxes. If a seller has prepaid property taxes through the end of the year but the closing date falls in September, the buyer reimburses the seller for the portion covering October through December. The calculation works on a per-day basis. Condo maintenance fees follow the same logic. Because common expenses are typically paid at the beginning of each month, a mid-month closing means the buyer credits the seller for the remaining days already covered.
Metered utilities like hydro, water, and natural gas are handled differently. The seller arranges for a final meter reading on closing day and pays their bill up to that date, so no adjustment between the parties is needed for those items. Fuel oil or propane, however, does appear on the statement because the seller usually tops up the tank and the buyer reimburses that cost.
The seller's lawyer prepares the statement of adjustments and delivers it to the buyer's lawyer before closing. Both sides review it to confirm the math and flag any errors. The final figure on the document determines the certified cheque or wire transfer amount the buyer must provide on closing day, on top of other costs like land transfer tax and legal fees. For new construction purchases, the adjustments tend to be more complex and may include development charges, utility connection fees, and other builder-specific items that go well beyond typical resale adjustments.
Understanding this document matters because it directly affects how much money you need to close. Your real estate lawyer will walk you through each line, but knowing what to expect removes a common source of last-minute confusion. To learn more about what to expect when your transaction finalizes, read What Happens on Closing Day When Buying a Home in Ontario?