Humber/Ontario Real Estate Course 4 Exam Practice

If a seller receives an electrical bill to cover their consumption up to just prior to house closing, what action should be taken regarding adjustments?

1. A credit is owed to the seller for the full 14 days of occupancy.

2. A credit of approximately $25.19 for the buyer.

3. No adjustment is necessary on closing.

4. The seller should pay this bill directly with no need for an adjustment.

The correct answer is: No adjustment is necessary on closing.

The correct interpretation in this scenario is that no adjustment is necessary on closing. This means that while the seller may receive an electrical bill covering consumption leading up to the closing date, there is typically an understanding that any utility bills incurred prior to the closing are the responsibility of the seller. In real estate transactions, utilities are generally prorated based on the sale date; however, if the seller has been occupying the property until closing, they are expected to cover those bills up to that point. Since the seller would typically have paid for the usage covered by that bill, any amounts incurred before the closing date should already be accounted for in the seller's financial obligations and not require additional adjustments to the buyer. As a result, no further credit or adjustment for utilities is necessary on the closing statement, reflecting standard practices in handling utility payments and responsibilities in real estate transactions.