Glossary
Adjustment Date
The adjustment date is the day from which ownership costs such as property tax and condo fees are divided between the buyer and the seller..
An adjustment date is the date used to divide the ongoing costs of owning a property between the seller and the buyer, so each party pays only for the period during which they owned it. It is normally set out in the agreement of purchase and sale and usually falls on the completion or possession day, when the property legally changes hands.
How the adjustment date works
Certain property costs are not billed daily. Property tax is often paid annually or semi-annually, condo or strata fees are usually monthly, and utilities, fuel oil or prepaid rent may sit in the seller's account. Rather than let one party absorb a full billing period, the buyer's lawyer or notary prepares a statement of adjustments that pro-rates each item to the adjustment date.
If the seller has already paid for a period that extends past the adjustment date, the buyer typically owes the seller a credit for that unused portion, which is added to the funds the buyer brings to closing. If the seller still owes money for a period that has already passed, the amount generally reduces the seller's proceeds.
What gets adjusted
- Property tax, including municipal and any provincial or education levies already billed.
- Condominium or strata fees, plus any special assessments the corporation has levied.
- Utilities and fuel, such as prepaid oil, propane or metered services.
- Rent collected by the seller for a period after closing, when a tenanted property is sold.
- Deposits or prepaid items the seller has already funded for the buyer's benefit.
Land transfer tax, legal fees and the mortgage itself are separate closing costs and are not treated as adjustments.
Why it matters to a buyer
Adjustments can move several hundred or several thousand dollars in either direction, so they affect the exact amount on the certified cheque or bank draft requested at closing. A buyer should review the statement of adjustments before signing rather than assume the figures are correct, and should ask the lawyer to explain any credit that looks unfamiliar.
Do not confuse the adjustment date with a mortgage interest adjustment date, which is the day interest begins to accrue on an advance of funds. The two terms appear in the same transaction but describe different things. The closing costs guide walks through the full list of amounts due on completion day.
Frequently asked questions
What is the difference between an adjustment date and a closing date?
They are often the same day, but they describe different things. The closing or completion date is when title transfers and the purchase price is paid. The adjustment date is the dividing line used to pro-rate ongoing costs like property tax, condo fees and prepaid utilities between the seller and the buyer. Some contracts set them apart, so check the agreement.
Does the adjustment date affect how much money I need at closing?
Yes. Any credit owed to the seller for costs already prepaid past that date is added to the funds you bring, while amounts the seller still owes reduce the seller's proceeds. Because the figures are calculated from actual tax and fee records close to completion, the final amount can differ from an early estimate.
Who calculates the adjustments?
The buyer's lawyer or notary, and in some provinces the seller's representative, prepares the statement of adjustments using municipal tax records, condo corporation documents and utility statements. Buyers should review the statement and ask questions before releasing funds. Confirm any figures you are unsure about directly with the municipality or condominium corporation.
Sources
Related terms
- Statement of Adjustments — A Statement of Adjustments is the closing document that lists the amounts each party to a property transaction owes or is owed, fixing the final cash balance.
- Completion Date — The date on which a real estate sale legally closes, the mortgage funds are advanced, and ownership of the property transfers to the buyer.
- Closing Costs — Closing costs are the one-time fees, taxes, and charges paid on top of a home's purchase price, separate from the down payment.
- Property Tax — A property tax is a municipal levy on property ownership, based on assessed value and the local rate, often collected with your mortgage payment.
- Closing Day — Closing day is the date a Canadian home purchase completes, when funds are paid out, the mortgage is advanced, and title transfers to the buyer.