Your Guide to Understanding Closing Day “Math” on Your Real Estate Adventure
When you buy or sell a home, the money exchanged on closing day isn’t just the purchase price. There’s a behind-the-scenes calculation that ensures each party pays their fair share for property taxes, utilities, and sometimes condo or homeowner association (HOA) fees.
This process is called the Statement of Adjustments, and it’s outlined in the Residential Purchase Contract (Section 10.4). It’s a vital part of the closing process—and one that often surprises first-time buyers and sellers.
Let’s break it down.
1. Why Adjustments Are Necessary
Property ownership changes hands partway through the year, but bills like property taxes, utilities, and HOA fees are often billed monthly, quarterly, or even annually. The adjustments make sure the seller covers costs for the days they owned the home, and the buyer covers costs for the days after possession.
Think of it as dividing up the “house expenses pie” so everyone pays for only the slice they ate.
2. Property Taxes: The Big One
In Alberta, property taxes are typically billed once a year (often in May or June) and are due on the last business day in June. The bill covers the entire calendar year.
Here’s how it works:
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If the seller has already paid the full year’s taxes, the buyer reimburses the seller for the portion of the year they will own the home.
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If the seller hasn’t paid yet, the seller credits the buyer the amount needed to cover their portion when the bill comes due.
💡 Example:
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Annual taxes: $4,000
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Closing date: September 1
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Seller has paid the full year’s taxes
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Buyer reimburses the seller for September–December = 4 months (4/12 of $4,000 = $1,333.33)
3. Utilities: Keeping the Lights On
Utilities such as water, sewer, electricity, and gas are handled differently depending on the municipality and service provider. Some are billed monthly; others every two months.
At closing:
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Sellers pay up to their possession date.
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Buyers set up new accounts in their name from possession day forward.
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In some cases, the lawyer will adjust final utility amounts on the Statement of Adjustments if an exact reading is available; otherwise, sellers may pay a final bill directly to the utility company after moving out.
4. Condo Fees or HOA Dues
If you’re buying a condo or a property in a community with a homeowner association (HOA), you’ll be responsible for regular fees that cover shared expenses—such as building maintenance, insurance, amenities, landscaping, or snow removal.
How adjustments work:
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If the seller has paid ahead, the buyer reimburses them for the unused portion of the fees from possession day onward.
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If fees are due shortly after possession, the seller credits the buyer their share so the bill can be paid in full.
The Estoppel Certificate:
Before closing, the seller’s lawyer will request an estoppel certificate from the condo corporation or HOA. This document confirms:
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The current monthly fee amount.
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Whether the seller is up to date on payments.
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Any upcoming special assessments or arrears.
The estoppel is critical because it protects the buyer from unknowingly taking on the seller’s unpaid fees.
Special Assessments:
A special assessment is an extra fee charged by the condo corporation or HOA to cover large, one-time expenses (like roof replacement, parkade repairs, or major landscaping projects). According to standard contract terms, if a special assessment is levied (assessed) before the possession date—whether or not it’s due by possession—the seller is responsible for paying it in full.
For buyers, this means you’ll start ownership without the surprise of inheriting a major bill from before you moved in. For sellers, it’s important to know that even if payment isn’t yet due, the obligation to pay is locked in once the board has formally assessed it.
5. How You’ll See It on Your Statement of Adjustments
Your lawyer prepares the Statement of Adjustments a few days before closing. It lists:
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Credits – Amounts the buyer owes to the seller (e.g., reimbursement for prepaid property taxes).
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Debits – Amounts the seller owes to the buyer (e.g., unpaid utility charges up to possession).
The net result is rolled into the final amount the buyer must bring to closing or the seller will receive from the sale.
6. ARIVL Tips for a Smooth Adjustment Process
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Buyers: Ask your lawyer for a copy of the Statement of Adjustments before you sign your closing documents so you understand each line item.
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Sellers: Provide your lawyer with receipts or account statements for taxes, condo fees, and HOA dues as soon as possible.
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Both Parties: Remember, adjustments are about fairness—not extra charges.
Wrapping It Up
The Statement of Adjustments ensures a fair split of costs and keeps both parties on the right side of the ledger. It’s one of the final steps before you get your keys (or close your sale) and part of making sure your real estate adventure ends with no loose ends.
At ARIVL, we help you understand these details so there are no surprises on closing day—just a smooth transition into your next chapter.
ARIVL: Your Real Estate Adventure Awaits!