Understanding the Statement of Adjustments in Real Estate Transactions
Below is a sample Statement of Adjustments with explanations for the various items on it. By way of summary, a Statement of Adjustments is used to calculate adjustments in a typical real estate transaction. They are usually prepared by the lawyer for the Vendor and sent to the lawyer for the Purchaser of a property.
The purpose of the Statement of Adjustments is to calculate and show the calculations that determine the exact amount the Purchaser will have to pay to the Vendor on closing. It is divided into three columns: the first is a description of the item being adjusted, the second shows credits to the Purchaser and the third shows credits to the Vendor.
The first item in a Statement of Adjustments is always the sale price of the property as agreed upon in the Agreement of Purchase and Sale. The second item is always the deposit paid by the Purchaser, which is typically held in the Real Estate Agent’s trust account. The remaining items will vary between transactions and can include property taxes, fuel costs, unmetered utilities, common expenses and mortgages that are being assumed.