Most contracts dealing with real estate allow for adjustments
to be made for costs that are paid for by either the Buyer or the Seller
directly, but benefit both the Buyer and the Seller. These adjustments
are presented on a document known as the Statement of Adjustments and
commonly include an adjustment for property taxes that have either been
paid by the Seller or will be paid by the Buyer, an adjustment for condominium
fees in the case of transactions involving Condominium Units, and adjustments
for damage deposits and paid up rental in the case of transactions involving
rental property.
When a Seller has made payments that are adjusted to reflect the fact
that the Buyer will have a benefit from that payment after becoming
the owner of a property, then those amounts are added to the total that
the Buyer must pay to the Seller on closing. When the Buyer must make
payments after becoming the owner that the Seller has already received
a benefit for, such as property taxes, then those amounts are deducted
from the total that the Buyer must pay to the Seller on closing.
Additionally, Buyers and Sellers will need to pay legal costs. A Buyer
will need to pay the costs of registration of the transfer of land and,
in the case of a Buyer with financing, the Buyer will also have to pay
for the costs of preparation of financing documents and registration
of security, usually by way of a mortgage, for the Buyer’s lender.
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The general opinions expressed herein are for information
purposes only and are not to be relied on. Individuals are encouraged
to seek legal advice as it relates to their specific fact scenario to
ensure they are fully aware of their legal rights and obligations.
