What adjustments will my lawyer bill me for on closing?

The statement of adjustments is the document that tells you what you actually owe on closing day. It arrives from the builder’s lawyer shortly before closing, and it is where the price you agreed to becomes the amount you pay.

What is typically on it

Added to the price:

• Development charges, levies and imposts, increases since you signed, uncapped unless you negotiated a cap. Usually the largest adjustment.
• Utility and service connection charges, water, gas, hydro.
• Meter installation charges.
• Tarion enrolment fee.
• Grading, sodding and driveway deposits, often refundable once the work is completed and inspected.
• Hydro, gas and water security deposits.
• Law Society and registration charges.
• Builder’s administrative, document and occupancy-related fees.
• Prepaid property taxes, reimbursing the builder for the period after closing.
• HST on any applicable fees and upgrades.
• Any HST rebate amount the builder loses because you do not qualify, up to $80,000, and by far the largest potential item. Why this happens.

Credited to you:

• Your deposits paid to date.
• Any incentive or credit confirmed in a written amendment.

Two things to do

Ask for an estimate months in advance. Most lawyers will produce one on request. Receiving the real statement ten days before closing, with no ability to raise money, is how people end up borrowing from family at the last minute.

Have your lawyer check every line against the agreement. Adjustments must be authorised by the agreement. Items appear on statements that are not supported by it, or are charged at more than the agreement permits. A lawyer who reads the statement against the contract, rather than just processing it, sometimes finds thousands.

This is a reason to use a lawyer experienced with new construction specifically. The document set is different and considerably longer than resale.

Where the surprises come from

In order of size:

1. A failed HST rebate, up to $80,000.
2. Uncapped development levies, commonly $5,000 to $20,000 or more.
3. An appraisal shortfall, which is not an adjustment but is due the same day.
4. The accumulation of small fees, which together often exceed $5,000.

The number to plan around

On a $1,100,000 freehold home outside Toronto, a sensible plan is land transfer tax of about $18,475, adjustments of $10,000 to $30,000, and legal fees of $2,500 to $4,000, so $30,000 to $45,000 beyond your deposit, plus a reserve.

Let’s estimate yours before it is a surprise.