Humber/Ontario Real Estate Course 4 Exam Practice

Which type of utility may not require adjustments at closing if a reading is taken on the final day?

1. Electricity

2. Fuel

3. Internet

4. Natural Gas

5. Telephone

6. Water

The correct answer is: Fuel

The correct answer is fuel, and here's why this is the case. In many real estate transactions, the buyer and seller may negotiate the handling of utility payments at the time of closing. For utilities like electricity, water, and natural gas, it is common practice to take final readings prior to closing to ensure that all costs are accurately allocated between the buyer and seller. However, for fuel, specifically in the context of properties that use a fuel delivery system (like oil or propane), it is often less complicated. If a reading is taken on the final day, this typically doesn't necessitate any adjustment at closing because the seller usually has a specific amount of fuel that they will leave in the tank. The buyer then either pays the seller for that remaining fuel or the situation is simply considered as part of the overall transaction. This can differ from other utilities, which may involve more frequent billing cycles and ongoing assessments that require precise pro-rating to determine what the buyer owes or is credited for at closing. Understanding these nuances is crucial as they can influence the financial negotiations at closing.