Adjustments

When purchasing a property, it is important to keep in mind that there are more costs than simply the purchase price. As I have blogged about here and here, there are a number of disbursements that you should always factor in when budgeting for your home purchase. One further item that you should also budget for is the possibility of adjustments. Taxes, for example, are paid through quarterly instalments in most Ontario municipalities. If the total taxes for the year are $2,000.00, the vendor has paid the first three instalments totalling $1,500.00, and the property is being sold in August, then the vendor will have overpaid on taxes because there are more than three months remaining in the year. In that case, the vendor will be credited back with the overpayment and this will be added on to the balance due on closing. The same type of adjustment happens with items such as fuel oil or propane, common expenses for condominiums, and tenancies if the property is wholly or partially rented. You should always budget for these possibilities to ensure that you avoid surprises when you approach your closing date.