Statement of Adjustments in Real Estate
Understanding What Happens on Closing
Featured Blog Post Written by: Martin Kastelein Notary Public
If you are a Home Buyer or Seller, and in need of a notary, you may contact us by calling 604-526-7884 or email [email protected]. You can also find out more about us on our website.
Whether you’re buying, selling or refinancing your home, you’ll need a real estate notary or lawyer to facilitate the completion day of the transaction.
On the completion day, you’ll meet with your notary to go through the statement of adjustments which will show you exactly how much is required to close the transaction in order for title to be transferred.
This blog will help go through the statement of adjustments in real estate, as well as provide example templates for both seller and buyer transactions.
Read for everything you need to know about the statement of adjustments!
What is a Statement of Adjustments in Real Estate?
The Statement of Adjustments is a document that calculates all of the adjustments of a monetary nature that need to take place between a Buyer and a Seller in a real estate transaction.
In British Columbia, they are typically prepared by the notary or lawyer that is acting for the Buyer. There is one for the Buyer called the Buyer Statement of Adjustments and a separate one for the Seller called the Seller Statement of Adjustments. I have provided a sample of each below.
The Statement of Adjustments can include a variety of items and it is driven by Section 6 titled ADJUSTMENTS of the current Contract of Purchase and Sale used in British Columbia which states and I quote “The Buyer will assume and pay all taxes, rates, local improvements assessments, fuel utilities and other charges from, and including, the date set for adjustments, all adjustments both incoming and out going of whatsoever nature will be made as of “December 2, 2018” (Adjustment Date).
Generally speaking, adjustments can include property taxes, city utility charges, property tax credits at the city tax department, title insurance, survey certificate, strata fees, strata move in and out fees, rents, tenant damage deposits, manufactured home pad rental charges, and others.
Buyer Statement of Adjustments
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*DOWNLOAD BUYER STATEMENT OF ADJUSTMENTS EXAMPLE*
In the example, the items that you need to pay as the Buyer are located in the Debit column.
Starting from the top, you will see the Purchase Price, Property Transfer Tax, deposit paid and then the adjustments for the property taxes and city utilities. In the example, the Seller has paid both on time. Although most cities in B.C. collect the property taxes in early July of each year and the annual utility charges in the spring of that year, that is for the calendar year period from January 1 to December 31 of that year.
The next item shows the strata fees adjustment. The Seller has paid the strata fees for the entire month and we give them back their share for the rest of December. We obtain current documents from the strata management company and the cost for those items is shown next. Although your realtor has likely ordered strata documents, they do not normally order the strata Form F which the notary office needs to satisfy the Land Title Office that there are no funds owing to strata. As well, we order a current strata Form B to ensure that we have proper up to date information.
The next item is the cost we need to pay to verify and record your mortgage lender’s info with the strata’s insurer and obtain written verification of same.
The sample notary fees, disbursements and taxes are the next item. All items in the Credit column are then totalled and shown at the bottom of the column.
The Credit column shows the items the Buyer gets credit for such as the mortgage funds from the Lender and the deposit paid to the real estate office as set out in the sample. Once all of the “credit” items are deducted from the total of the Debit column, the final amount is the amount that you need to bring to our office via bank draft.
Seller’s Statement of Adjustments
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*DOWNLOAD SELLER STATEMENT OF ADJUSTMENTS EXAMPLE*
In the example provided, the Credit column lists the Sale price and then the strata fee adjustment. As the Seller, you have paid the strata fee for the month and you are getting your pro-rated share returned.
You have paid the property taxes and city utility charges on time and those are the next two times adjusted. Although most cities in B.C. collect the property taxes in early July of each year and the annual utility charges in the spring of that year, that is for the calendar year period from January 1 to December 31 of that year.
The Debit column shows the real estate commission payable to both listing and selling real estate offices. Yes, the Seller typically pays both realtors. Those two items are deducted from the total of the Credit column and that new amount is what is sent to your notary or lawyer’s office in trust.
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If you’re looking to sell or buy a property and would like guidance from a realtor from start to finish then give us a call. We are happy to walk you through the process. Start a conversation by calling 604-765-0376. Prefer text? 604-319-0200 or email [email protected] to start a conversation.
If you already have a realtor and are in need of a professional and experienced notary for your real estate transaction, contact the office of Martin Kastelein Notary Public by calling 604-526-7884 or email [email protected]. Martin Kastelein Notary Public has been chosen as the best Notary Public by the readers of The Record in New Westminster for the past 5 consecutive years.
