Statement of Adjustments Explained (What You Owe the Seller on Closing)
The statement of adjustments reconciles buyer and seller on closing day: prepaid property tax, condo fees, utilities, and your deposit. A September 1 example.
The statement of adjustments is a one-page account your lawyer prepares before closing. It starts with the purchase price, subtracts your deposit, then adds or subtracts anything the seller has prepaid or owes past the closing date (property tax, condo fees, utilities, sometimes rent), and ends with the "balance due on closing," the exact amount you wire. For a September 1 closing where the seller has paid $4,800 of property tax for the year, you reimburse the seller for the four months you will own the home: $1,600.
The CostToClose guided buying flow estimates the tax adjustment from your price, city and closing month.
What is on it
| Line | Direction | Typical amount |
|---|---|---|
| Purchase price | Credit to seller | The contract price |
| Deposit | Credit to buyer | Whatever you paid with the offer |
| Property tax | Either way | Seller's prepaid share past closing → credit to seller; unpaid arrears → credit to buyer |
| Condo/strata fees | Credit to seller | Prorated for the rest of the month |
| Utilities on a flat plan (some municipalities bill water annually) | Either way | Small |
| Fuel oil or propane left in the tank | Credit to seller | At current price |
| Rent and security deposits (tenanted property) | Credit to buyer | Prepaid rent past closing and the deposit with interest |
| HST on a new build, less rebates assigned to the builder | Credit to seller | Only on new construction |
| Balance due on closing | Price − deposit ± adjustments |
Your own closing costs (land transfer tax, legal fees, title insurance) are not on the statement of adjustments. They appear on your lawyer's separate trust ledger, and the total of both is what you bring.
Worked example
Closing 1 September on a $700,000 house in Ottawa. The seller paid the full year's property tax of $4,800 in June. Deposit was $35,000.
| Line | Buyer | Seller |
|---|---|---|
| Purchase price | $700,000 | |
| Deposit | $35,000 | |
| Property tax: seller paid $4,800 for the year; buyer owns 1 Sept–31 Dec = 4 of 12 months | $1,600 | |
| Balance due on closing | $666,600 |
Proration is by days at most law firms, so the true figure is 122 ÷ 365 × $4,800 = $1,604. The 4/12 approximation is fine for planning.
Had the seller not yet paid the second tax instalment, the adjustment would reverse: the seller would credit the buyer for the January-to-August share they owe.
Condo example
Same closing date, $520,000 condo with $460 monthly fees the seller paid on 1 September:
- Condo fee adjustment: buyer owns 30 of 30 days in September → credit to seller $460.
- If the closing were 16 September: 15 of 30 days → $230.
- Special assessment levied before closing: normally the seller's, unless the agreement says otherwise. Check.
Where buyers get caught
- The adjustment is in cash. A $1,600 tax adjustment is not financeable. Have it in the closing-cost budget.
- Interim occupancy on a new condo. Occupancy fees paid to the builder before final closing are not adjustments. They are rent, and not credited back.
- Assessed taxes vs actual. For a new build the first year's tax is often estimated on land value only; a later supplementary bill lands on you.
- Reading it late. Your lawyer sends the statement a day or two before closing. Ask for a draft a week out so there is time to question a line.
Frequently asked questions
Who prepares the statement of adjustments?
The seller's lawyer usually drafts it and the buyer's lawyer reviews it. In Quebec the notary prepares it for both parties.
Is the property tax adjustment always in the seller's favour?
No. If the seller has prepaid past closing, you reimburse them. If the seller owes tax for the period before closing, they credit you. It depends on when the municipality's instalments fall relative to closing.
Does the statement of adjustments include land transfer tax?
No. Land transfer tax, legal fees and title insurance are your own closing costs, shown on your lawyer's trust statement, not on the adjustments between buyer and seller.
How is the adjustment calculated?
By days: annual amount × days the buyer owns the home in the period ÷ days in the period. Closing day itself is usually the buyer's.
Can I dispute an adjustment?
Yes, before closing. Ask your lawyer to explain any line; errors in tax figures are common when the seller's most recent bill is missing.
Sources
- Law Society of Ontario, Real estate practice guidelines: statement of adjustments — checked 14 Sept 2026
- Real Estate Council of British Columbia (BCFSA), completion and adjustments — checked 14 Sept 2026
- Chambre des notaires du Québec, purchase process — checked 14 Sept 2026
This guide is general information for Canadian home buyers and sellers, checked against the sources listed above on the date shown. It is not legal, tax, or mortgage advice. Rules and rates change; confirm current figures with your lawyer or notary, your lender, or the government office that administers the tax before relying on them.