Adjustments usually point to those items that need apportionment with effect from the date when the transaction is closed. Things like the rent, the mortgage interest rate, the realty tax to be applied, the local improvement rates, and charges on unmetered public or private utility usage, as well as the non-metered cost of fuel all collectively require adjustments. Adjustments continue as such till the day of completion arrives, all adjustments are apportioned and allowed during the intervening period. However, when the day of completion arrives, these amounts are charged to the buyer. Different provinces utilize different terms to refer to the day of completion; the term "closing date" is employed in some provinces.

A clause is usually inserted into all standard agreements or contracts made in different provinces, this clause specifies the adjustments applicable on the date of closing. Residential transactions are referred by the use of a specific set of words in these clauses.


Adjustments will normally not be required when a metered reading is taken on closing. However, this may differ in the case of other utilities, for example, the seller usually fills the tank and the buyer pays for a full tank on the date of closing.


When the buyer arranges new coverage, there will be no adjustment required as per the agreement made. For example, in Ontario, an Agreement of Purchase and Sale employed in most deals will specifically state: that "no insurance shall be transferred on completion" or on the date of closing.
Special provisions may be set for things such as condominiums and the procedures employed may vary in different provinces.

Interest on assumed mortgages

As mortgages are paid in arrears, the seller will make regular payments till the closing date. When the seller has made the last payment, the principal balance is determined and the interest calculated on a per diem basis, which is finally credited to the buyer, and he or she will pay this amount at the time of the next regular payment. The buyer is responsible for the interest due on the mortgage applicable on the actual closing day.


The prepaid rent accruing from the date of closing to the next rent due date is also credited to the buyer.

Taxes and local improvements

Adjustments in relation to the closing date as a rule are calculated on the proportionate share of the taxes borne together by the buyer and the seller. This calculation can become complex, if there are fluctuations in the payments made to the municipality during the year. The varied types municipal budgeting processes followed by different municipalities may also complicate this situation for the buyer and the seller. This is because all municipalities need to determine in advance what their anticipated taxes will be the next year. The final budget for the municipality may not be determined until the spring of the next year as the majority of councils are usually elected during the fall. As a result, most municipalities are forced to estimate taxes and distribute interim tax bills in advance. These interim bills are used by sellers to remit taxes, and adjustments are made coincident with the final tax notice given later. In addition, all taxes for the year are usually paid in advance, much before the year has ended. Therefore, the position of the seller with regard to the taxes paid can vary substantially and may depend on the time of year in which the sale takes place.

New mortgage and specific taxes

The tax apportionment followed is relatively simple when a property is sold to any buyer in the market. For example, in the case of a sale completed on May twenty third of a year, the taxes for one hundred forty two days of the year will be paid by the seller and the buyer will then have to pay the taxes due for the other two hundred and twenty three day - this amount will include the day of completion, which is simply the day on which the buyer takes the legal responsibility and ownership of the property being traded.

Mortgage lenders may however want to ensure that enough money is collected to enable payment of taxes for the entire year at one time; this occurs if a new mortgage is taken on the property by the buyer.

Different lenders may have different policies pertaining to these types of transactions. Certain lenders may demand that payment be given by the completion date; however, other lenders will most likely resort to means including hiking the monthly tax payment dues, so as to recover the deficiency over the next financial year.

Taxes specific to PIT mortgage

In cases where the buyers assume a PIT mortgage, the accumulated monies remaining in the tax account will stay with the mortgage, as lenders will not return these funds to the sellers. Sellers need to be reimbursed by the buyers through an adjustment on the Statement of Adjustments agreed upon by buyer and seller.


The normal procedure is that the seller will order a reading of the meter on the property coinciding with the date of closing. As a result, adjustment will not be required to be made. At the same time, specific areas within provincial jurisdictions might place bulk charges for the services provided to residents of the area.

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