What is a Statement of Adjustments?

Understanding what will happen on closing

Whether you are buying, selling, or refinancing a home, you will come across a Statement of Adjustments when closing time comes. This document, prepared by a lawyer or notary, clearly lays out the purchase price, deposit, taxes and other financial obligations of the transaction for both the buyer and seller—so everyone knows what they will be paying or receiving. This way, all costs and credits can be laid out, calculated, adjusted and formalized before closing the transaction and transferring the title.

What will it look like?

There will be a separate Statement of Adjustments for both the buyer and the seller. The Statement will be divided into three columns representing first a description of the item being adjusted, second shows credits to the buyer, and the third shows credits to the seller.

The first item in the Statement will always be the agreed upon sale price, the second will always be the deposit paid by the buyer, and the remaining items will vary from transaction to transaction. Some examples of adjustments include strata fees, tenant damage deposits, title insurance, fuel left on the property, and more.

The most common adjustment is to property taxes. The way that property taxes are adjusted is that the amount of total taxes for the year is divided by 365 to a per diem rate. The seller is responsible for paying the amount of taxes for the days that they owned the property. If they have paid more than this allocated amount, then the buyer is required to reimburse the seller for that amount and vice versa.