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Closing Cost and Adjustments
Legal Costs:
Legal costs for a sale with one mortgage to be discharged usually range from $500 - $700 regardless of whether the seller retains the services of a Lawyer or Notary Public. It is important for the seller to understand what is or is not included in a quote and what might be added as additional charges. Costs that are usually included in a quote are professional fees, land title search and registration fees and miscellaneous office disbursements. GST and PST are usually added to fees and disbursements as with other services and products.
Closing Adjustments:
Closing adjustments cover a number of items including municipal taxes, municipal water and sewer fees, strata maintenance fees, rent and security deposits.
In the case of strata title properties, strata fees are charged and paid monthly on the first day of each month. The monthly strata fees will be pro rated between the seller and the buyer, with the buyer reimbursing the seller for the prepaid monthly strata fees based on the number of days between the date of adjustments agreed to in the Contract of Sale and Sale and the last day of the month.
In the case of a continuing tenancy the buyer receives a credit for a portion of the rent and the security deposit with accrued interest as the buyer will be responsible for reimbursing the correct amount when the tenant vacates at a later date. These buyer’s credits are debited from the seller’s sale proceeds.
Municipal property taxes and water and sewer will also be adjusted. Municipal charges are based on a calendar year. Some municipalities such as Vancouver provide for an advance payment in February with the balance due and owing usually at the beginning of July. Other municipalities have a payment for water and sewer in February and taxes are paid in full usually at the end of June or the beginning of July.
The adjustment between seller and buyer will therefore vary depending on the time of year of closing of the transaction and the municipality in which the property is located. The tax and water and sewer adjustments are the most complicated adjustments to understand but they are based on the parties being responsible for any costs associated with the property only for the period of time in which they are in possession.
The adjustments between seller and buyer are set out in a document normally referred to as the Statement of Adjustments. The Statement of Adjustments sets out the sellers proceeds after deducting for commission and adjusting for taxes, water and sewer, strata maintenance fees, rent and security deposits and any other items to be adjusted between the parties. The Order to Pay then sets out the “net” proceeds after allowing for payout of any existing mortgages or other charges against title. | 
