Q. My lawyer has produced this strange looking document that I cannot make heads or tails of with all of the amounts necessary in order to complete the purchase of my new home. Can you explain this to me?
A. A statement of adjustments is a necessary document to complete a real estate transaction. In resale homes and condos it is relatively standard. It states the purchase price, minus your deposit and plus or minus pre-paid expenses that belong with the property. For example, if your property is closing tomorrow and we were back in the middle of December, the property taxes will have been paid to the end of the year; so, the vendor is credited on a per-day basis for the portion of taxes they have paid on your behalf. The same would go for common expenses for a condo, which are generally paid on a monthly basis: The vendor would be credited for the remaining days of December that they had paid on your behalf. Most utilities are individually metered so you should arrange to have a meter reading done on the day of closing and an account set up in your name to pay for ongoing utilities.
The subject becomes substantially more complex when you are purchasing a new build. The developer will add on a myriad of adjustments that I have written about in the past. They can take the form of development charges, meter installation, landscaping and even law society transaction levy charges. Basically, the builder is passing on to you any of the applicable charges to develop the property and specifically your new home or condo.
You should review these statements of adjustment with your lawyer in order to understand where your money is going. Needless to say, there are hidden charges that may or may not be a surprise to you: especially first time homebuyers.
– Jeffrey D. Cowan is the principal of Cowan & Taylor, Barristers & Solicitors, jeff@cowanandtaylor.com. The information contained in this article should not be relied upon as legal advice.
