Humber/Ontario Real Estate Course 4 Exam Practice

What is detailed within the statement of adjustments in real estate transactions?

1. Prepared exclusively by the buyer's lawyer

2. Includes financial details like taxes and insurance

3. Only outlines prepaid taxes

4. Lists non-financial transaction aspects

5. Makes pro-rated insurance payments irrelevant

6. Ordered and reviewed by seller's lawyer

The correct answer is: Includes financial details like taxes and insurance

The statement of adjustments in real estate transactions plays a crucial role in outlining the financial details related to the sale. This document provides a comprehensive breakdown of all financial adjustments that need to be made between the buyer and the seller at closing. It typically includes items such as the allocation of property taxes, homeowner association fees, and insurance premiums, ensuring that both parties are accurately compensated for what they owe or are owed up to the closing date. Including financial details like taxes and insurance is essential because it ensures that the buyer is not responsible for taxes or fees incurred prior to their ownership of the property. Likewise, it allows the seller to receive compensation for any pre-paid amounts related to the period they no longer own the property. Therefore, the statement of adjustments serves as a financial reconciliation tool that clarifies the financial responsibilities of each party involved in the transaction, making option B the accurate answer. The other potential choices focus on various aspects not covered thoroughly by the statement of adjustments. For example, it is not created solely by the buyer's lawyer nor does it exclusively outline prepaid taxes or non-financial aspects. Additionally, pro-rated insurance payments are very much relevant, as they are part of the financial details included in the statement. So, the comprehensive inclusion of financial transactions