STATEMENT OF ADJUSTMENTS
What’s this statement of adjustments business?
You have found the perfect mortgage for your family, you have signed a commitment, and you’re now at the lawyer’s office signing papers. You might hear the term “statement of adjustments” and wonder what that means.
A Statement of Adjustments is a document, typically prepared by a lawyer or notary, which clearly lays out all of the costs to the buyer as a part of the closing process and any adjustments to that price.
Its goal is to ensure that all the financial obligations of the transaction are accounted for and clear to both the buyer and the seller (or, if it is mortgage renewal, the lender). It also serves to identify the method used to pay the purchase price.
You can also consider it a financial statement or worksheet, as it balances the credits to the seller and the credits to buyer.
Some of these credits may be:
CREDITS TO THE VENDOUR
- Purchase price of the property.
- Prorated amount of Municipal taxes that the purchaser owes the vendour because the vendor has prepaid to the end of the year.
- Prorated amount of Expenses (such as condo fees) that the purchaser owes the vendor because the vendor has prepaid to the end of the year.
- Reimbursement for rental or damage deposit amounts if the property is being rented out.
CREDITS TO THE PURCHASER
- Any deposit already paid
- Adjustments agreed to in the Agreement of Purchase and Sale
- Any rebates from the seller to the purchaser for any issues that arise after the agreement is signed. For example, the vendor may agree to make an adjustment after the results of a home inspection reveal something that needs to be fixed
The final line item in the document is the amount of money required to complete the transaction – this is the actual amount you are borrowing.
So while “Statement of Adjustments” might sound confusing, in reality it’s just a fancy name for a financial worksheet. Have questions about this? Feel free to get in touch.