Humber/Ontario Real Estate Course 2 Exam Practice

What does the statement of adjustments include?

1. Always prepared solely by the buyer's lawyer

2. Details not relevant to the closing process, such as prepaid taxes

3. Financial details of the transaction such as property taxes and pro-rated property insurance

4. Only the buyer's financial contributions

5. Prepaid insurance premiums without additional adjustments

6. Records of prior property valuations

The correct answer is: Financial details of the transaction such as property taxes and pro-rated property insurance

The statement of adjustments includes financial details of the transaction, such as property taxes and pro-rated property insurance. This document is typically prepared by the buyer's lawyer and outlines the adjustments that need to be made between the buyer and the seller to ensure that each party pays their fair share of expenses related to the property, taking into account the closing date. The adjustments can include items like property taxes, utilities, condo fees, and other relevant costs. It is an essential part of the closing process to ensure both parties are in agreement on how these financial details will be settled. Option A is incorrect because the statement of adjustments is not always prepared solely by the buyer's lawyer; it can also involve input from the seller's lawyer. Option B is incorrect because the details in the statement of adjustments are indeed relevant to the closing process, including items like prepaid taxes. Option D is incorrect because the statement of adjustments includes adjustments for both the buyer and the seller, not just the buyer's financial contributions. Option E is incorrect because the statement of adjustments may involve adjusting prepaid insurance premiums along with other financial details. Option F is incorrect because the statement of adjustments focuses on current financial details related to the transaction, not past property valuations.