What Is an Adjustment on Closing?

Just when you think you've tallied every closing cost, your lawyer's statement lists one more set of figures: adjustments. These are small reconciliations that make sure the buyer and seller each pay only for the days they actually own the home. They're rarely huge, but they catch buyers off guard — so here's exactly how they work.

Key takeaways

• Adjustments split shared, prepaid costs fairly between buyer and seller on closing day.
• The most common adjustment is property tax — if the seller prepaid it, you reimburse the remainder.
• Condo maintenance fees, utilities and fuel can also be adjusted.
• Adjustments are calculated by your lawyer and appear on the statement of adjustments.
• They're usually modest, but always budget a buffer on top of your core closing costs.

What is a closing adjustment?

A closing adjustment is a recalculation that ensures the buyer and seller each pay only for the period they own the property. Some costs — property tax especially — are paid in advance for the whole year. If the seller already paid the full year's tax but is selling in June, the buyer must reimburse the seller for the months from June onward, since the buyer will own the home for those months.

All of these reconciliations are summarized on a document called the statement of adjustments, prepared by your real estate lawyer. A lawyer is mandatory for closing in Ontario — see do you need a real estate lawyer in Ontario.

Common adjustments you'll see

Most adjustments fall into a handful of predictable categories:

How property tax adjustments work

Property tax is the adjustment buyers see most often. If the seller has prepaid the year's tax, the buyer reimburses the portion covering the time after closing. If the seller has not yet paid, the buyer may receive a credit instead. Because municipal tax rates vary widely across Ontario, the amount differs by city — learn more in property tax in Ontario explained.

It cuts both ways

An adjustment can be a debit or a credit. Sometimes you owe the seller; sometimes the seller owes you. Your lawyer nets it all into a single final figure on the statement of adjustments.

How adjustments fit your closing budget

Adjustments are usually modest compared with the big-ticket closing costs like land transfer tax and legal fees. Still, they're part of the total you need in your account on closing day. See the full breakdown in our guide to closing costs in Ontario, and avoid surprises with closing cost mistakes to avoid.

Build in a buffer

Because adjustments depend on the exact closing date and the seller's prepayments, you won't know the precise figure until close to closing. Set aside a small buffer on top of your estimated costs.

Keep more of your money with HOMEH

Adjustments are unavoidable, but the commission side of a purchase isn't. HOMEH gives eligible buyers the industry's highest Cashback Rebate — more than enough to cover adjustments, legal fees and then some. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting. Estimate your full bill with the closing cost calculator, then see your cashback with the cashback calculator.