Who prepares the statement of adjustments in a property sale and why it matters

Who Prepares the Statement of Adjustments in a Property Sale?

If you’ve ever witnessed the flurry around a closing day in Ontario, you’ve probably seen a document with a lot of numbers. That document is the statement of adjustments. It’s the accountant’s cousin in the closing family—important, precise, and easy to overlook if you don’t know what it does. Here’s the thing: in a typical Ontario sale, the seller’s lawyer usually takes the lead on preparing this statement. The buyer’s lawyer reviews it, and both sides use it to settle who pays what when, from the moment the deal becomes official to the moment the keys change hands.

Let me explain in plain terms. A property isn’t just bought for a flat price. It comes with costs that accumulate up to and sometimes after the closing date. Taxes that have already been paid or are due, utilities that have been used, condo fees, and even deposits or rents that belong to one side or the other – those things have to be split fairly. The statement of adjustments is the ledger that makes that split clear. It ensures the buyer isn’t paying for days the seller owned the home, and the seller isn’t leaving the buyer with bills they didn’t expect.

What the statement does, in one simple breath, is answer this question: on closing day, who owes what to whom? The answer isn’t decided on a whim. It’s calculated based on dates and the actual amounts that have accrued. The seller’s lawyer gathers the numbers, checks the bills, and crafts a clear, itemized sheet. Then the buyer’s lawyer reviews the figures, asks questions if something looks off, and confirms that everything lines up with the purchase agreement.

The seller’s lawyer as the primary preparer isn’t about keeping score for one side. It’s about making sure all the financial details tied to the seller’s ownership are captured accurately. The goal is to reflect what the seller has paid up to the closing date and what the buyer will need to assume from that date forward. Because real life doesn’t stop on a calendar date, the statement sometimes includes prorations for things like property taxes or utilities, which can be paid in advance by the seller or charged to the buyer.

The buyer’s lawyer plays a crucial supporting role. They review every line, verify that the numbers align with the agreement, and guard the buyer’s financial interests. It’s not a contest; it’s a calibration. If something seems off—an odd utility bill, a tax payment scheduled after closing, or a prepaid amount that wasn’t properly accounted for—the lawyers work it out. In many cases, the two lawyers exchange notes and adjust the figures before the final settlement.

What kinds of items show up on the statement of adjustments? A lot, actually, but here are the common suspects:

• Property taxes: Taxes are usually prorated to reflect the portion of the year the buyer will own the home. If the seller has already paid taxes for the year, the buyer often reimburses the seller at closing for the days after possession.

• Utilities: Gas, electricity, water, and sometimes heating oil or municipal services. If the seller has used utilities up to the closing date, those charges are settled so the buyer isn’t paying for days they didn’t live in the home.

• Condominium or maintenance fees: If the property sits in a condo regime, the seller’s prepaid fees or any outstanding charges get allocated accordingly.

• Rentals and deposits: If there’s a rental agreement in place or a lease, the statement may address rents already collected or due, and any security deposits tied to the tenancy.

• Prepaid items or credits: If the seller has prepaid certain charges (like a months’ worth of utilities or a closing costs credit), those get accounted for so both sides are treated fairly.

• Other day-to-day costs: Small but real costs such as water bills, sewer charges, or local assessments that have been accrued but not yet paid may appear on the sheet.

• Occupancy considerations: If the buyer takes possession before or after the scheduled closing, there might be a separate occupancy agreement that affects the adjustments. The statement will reflect those arrangements with a clear dollar amount.

Why this matters to both sides

• Fairness and clarity: The statement avoids finger-pointing after days or weeks. It’s a transparent ledger that shows exactly what’s owed by each party and why.

• Peace of mind for professionals: Real estate lawyers aren’t just filing paperwork. They’re making sure the numbers reflect the reality of occupancy, the timing of receipts, and the duties tied to the property. It’s less drama, more clarity.

• A smoother closing: When the adjustments are correct, the actual closing ceremony—funds exchanged, documents signed, keys handed over—happens more smoothly. No last-minute panic over who pays what.

A quick walk-through of the process

• Step 1: The seller’s lawyer compiles the adjustments. They pull the latest tax bills, utility statements, condo fee statements, and any other relevant invoices. They also review the Agreement of Purchase and Sale to understand what the parties expected.

• Step 2: The buyer’s lawyer reviews. They check for accuracy, reasonableness, and alignment with the contract. If something looks off, they ask questions or request adjustments.

• Step 3: Finalizing the numbers. After any needed corrections, both lawyers agree on the final figure. This becomes part of the closing documents.

• Step 4: Closing day. The buyer funds the purchase, the seller transfers ownership, and the adjustments are settled. The records show a clean handoff, with each party bearing responsibilities up to the moment of sale and beyond that moment, as agreed.

Common myths and practical tips for Humber course learners

• Myth: The statement is just about property taxes. Truth: It covers taxes, utilities, condo fees, and any prepaid items or tenancy issues. It’s a full-spectrum ledger for the moment of crossing the threshold.

• Myth: The buyer’s lawyer does all the work. Truth: The seller’s lawyer is the one who drafts the initial adjustments, with the buyer’s lawyer giving a careful eye to ensure fairness.

• Tip: Keep a simple desk file. Create a folder (physically or digitally) with recent tax bills, utility statements, and condo fee notices. When you’re on a file as a student or practitioner, having those documents handy helps you see how numbers line up.

• Tip: Understand timing. The closer you pay attention to the dates on each document, the easier it is to determine who owes what. A small misalignment in the date can tilt the calculation.

• Tip: Ask good questions. If you’re reviewing the adjustments in class or in a real-world scenario, don’t assume. Confirm every line item and how it was calculated. It’s a good habit for professional confidence.

A small real-world analogy

Think of the statement of adjustments like settling up after a shared vacation rental. You and your friend split the cost for groceries, utilities, and cleaning, depending on how many days you stayed in the place. If you arrive on a Wednesday and stay through Sunday, you don’t each pay a full week’s worth of expenses. The organizer (the seller’s lawyer in real estate land) tallies up what belongs to each party so the settlement is fair. The other party’s lawyer then double-checks that tally, just to make sure nothing got double-counted or forgotten.

A tiny caveat worth noting

No system is perfect, and sometimes there are hiccups. Perhaps a final bill arrives late, or a credit item needs re-calculation after an occupancy change. In those cases, the lawyers work together to adjust the numbers and ensure the closing continues with as little friction as possible. The goal is to protect both sides while keeping the process moving.

Closing thoughts for curious learners

If you’re studying Ontario real estate, understanding the statement of adjustments is like learning the behind-the-scenes beat of a well-rehearsed play. It’s not the flashiest part of a closing, but it’s one of the most important. It ensures everyone walks away with a clear, fair understanding of what was earned, what was paid, and what still belongs to whom as the keys change hands.

And if you’re wondering about the human side of the numbers, here’s a comforting thought: skilled lawyers aren’t just chasing cents. They’re helping a momentous life transition stay smooth. A family moves into a new home, a seller closes a chapter, and the next homeowner unlocks a future. The statement of adjustments is the quiet engine that makes that moment possible—accurate, accountable, and unassailably fair.

If you want to get a better feel for how this works in real cases, start by reviewing sample adjustments with a mentor or a trusted real estate professional in Ontario. Look at the way the items are categorized, how the dates are treated, and how the passing of financial responsibility is choreographed. It’s a practical skill—one that blends numbers with negotiation, law with everyday life.

In short: the seller’s lawyer usually prepares the statement of adjustments, with the buyer’s lawyer reviewing. The rest of the numbers tell the story of a fair transfer, from taxes to utilities to those last-minute charges that pop up just before the door closes. It might not be the spotlight moment, but it’s the backstage magic that makes a real estate transaction feel right.