Education Centre

  • Buying a Property

    • Statement of Adjustments

    On closing day, when everything else is said and done, two statements of adjustments are made: one for the buyer and one for the seller. Each statement is made by the respective real estate lawyer and outlines the closing costs each person will have to pay that day.

    What is listed on the buyer’s statement of adjustments?

    The statement of adjustments lists any amounts that need to be adjusted for and paid to the seller. If you are the buyer, your statement of adjustments will list:

    • the purchase price,
    • your deposit, and
    • any prepaid property taxes, utilities or fuel (oil) adjustments.
    What does a buyer’s statement of adjustments look like?

    You don’t need to be an accountant to understand the statement of adjustments – just imagine looking at one of your regular bank statements and seeing the various debits and credits.

    In a buyer’s statement of adjustments, the debits would be anything you have already paid for, like the deposit. The credits would include the purchase price of the home and any prepaid taxes or utilities you owe the seller.

    The total amount in the credits column (purchase price + prepaid adjustments) is what the seller must be paid on closing day. Subtract the deposit you’ve already paid and that is what you owe on closing day.

    What is a trust ledger statement?

    After completing the statement of adjustments, the full amount payable to the seller is then moved over to the trust ledger statement.

    The trust ledger statement shows all of the money involved in the transaction on closing day. Similar to the statement of adjustments, there are two columns for debits and credits.

    The debits column includes the full amount payable to the seller plus land transfer tax, title insurance, and legal fees and disbursements. Depending on the type of home you are purchasing, other fees may also be on the trust ledger statement. For example, if you’re buying a new home, the new home warranty enrolment fee and HST may also be on your statement.

    The credits column includes the mortgage loan you are getting from your lender and any extra amount you are paying yourself.

    The debits and credits columns should total the same amount, showing exactly how much must be paid out and where your money is going on closing day.

    Let’s look at an example of a buyer’s statement of adjustments.