PAYMENTS, COST & STATEMENTS OF ADJUSTMENMTS
During a real estate transaction, counsel for the buyer and seller will each create a Statement of Adjustments. The Statement of Adjustments is a legal document that
- Sets out the purchase price of the property;
- Outlines the credit given to the buyer for any deposit(s) made; and
- Prorates various items, such as municipal taxes or homeowner’s association fees.
According to Clause 10.4 of the Alberta Real Estate Association Residential Purchase Contract (the “Contract”), the seller is responsible to make payments for various items, such as real estate taxes, local improvement fees, and homeowner association fees, up to and including the Completion Day. After the Completion Day, those responsibilities are assumed by the buyer.
As such, if the seller has prepaid municipal taxes or homeowner’s association fees, for instance, up to a date that extends past the Completion Day then the seller’s need to be credited the buyer’s share of those cost(s), accordingly. Alternatively, if the seller has failed to pay municipal taxes or their homeowner’s association fees, for example, up to and including the Completion Day then the buyer’s need to be credited the seller’s share of that expense. This is the primary reason for why a Statement of Adjustments is needed in a real estate transaction.
A seller’s real estate agent and counsel should inform their seller client(s) of their responsibility to make payments under the Contract and the role of adjustments within a real estate transaction. If you have any questions concerning the seller’s responsibility for making payments on various items within a real estate transaction or the Statement of Adjustments, please do not hesitate to contact Khemka Law or counsel of your choosing. We are always here to assist you and your clients. Thank you for your time and consideration.
Pranav Khemka, Barrister & Solicitor
T: (403) 457-9577 | F: (403) 457-9578
LEGAL: The Thursday Tidbit provides general information and does not constitute legal advice. Circumstances may vary and no lawyer-client relationship is established from the use and reliance of this information. You are strongly advised to seek any legal advice by directly contacting Khemka Law or counsel of your choosing. Khemka Law does not warrant or guarantee the quality, accuracy or completeness of any information found within this Thursday Tidbit.