David's Blog


Capped Closing Costs on Home Purchase

I recently met with David Pylyp of RE/MAX Realty Specialists Inc. to discuss the problem of surprise closing adjustments and the need for a cap to be negotiated at the beginning of the purchase process. I learned that Mr. Pylyp has successfully negotiated a cap on closing adjustments for purchasers of a unit in the newest phase of the trendy California Condos project by Camrost-Felcorp located in Etobicoke’s master-planned Mystic Pointe community. By negotiating such a cap, Mr. Pylyp will inevitably save his clients thousands of dollars and a series of painful headaches in the days leading up to final closing.

Purchasers of new condominium units and freehold homes are consistently shocked when I tell them that they have to pay the developer a large some of money on closing for closing adjustments. It is all too often the case that this is the first time purchasers have heard anything about closing adjustments. For example, let’s assume you signed an Agreement of Purchase and Sale for the purchase of a beautiful two bedroom condominium unit three years ago. A letter is sent to you by the developer stating that final closing will take place in ten days. Excited about the prospect of finally taking title to the unit you have been occupying for several months now, you call your lawyer to arrange a meeting to sign closing and mortgage documents. The day before the meeting, you receive an email from your lawyer attaching a “funds summary” and a “statement of adjustments”. The first thing you look at is the statement of adjustments. All sorts of expensive fees appear on this mystical document, from the TARION enrolment fee to massive development and education levies. The adjustments total over $10,000.00 and you temporarily lose your mind. You then squeamishly look at the funds summary. Your lawyer is actually asking you to bring a certified cheque for $15,000.00 with you to the meeting. This can’t be right you tell yourself and everyone and anyone who will listen. You call your lawyer in a panic and demand an explanation. Unfortunately, the lawyer has an explanation: the developer is entitled to charge a variety of adjustments on closing because of some fine print buried in your agreement of purchase and sale, and, in your case these adjustments total $10,000.00. The other $5,000.00 has to do with land transfer tax and lawyer’s fees and disbursements. The bottom line is that your options are limited to coming up with the money to close or you risk being sued by the builder for failing to close the transaction.

You can easily avoid this type of unwelcome surprise by negotiating a cap on closing adjustments before you enter into an agreement of purchase and sale. Not surprisingly, your bargaining position is nil after you have signed the agreement of purchase and sale. Your lawyer or real estate agent may be able to assist in negotiating a cap on adjustments. In my experience, even a relatively high cap is better than no cap at all as any cap gives the purchaser a semblance of certainty as to the money it will take to close the transaction. In my experience, it is rare to see a builder willing to completely waive adjustments on final closing. Hopefully, real estate agents and builders will take a cue from Mr. Pylyp and Camrost-Felcorp by working together to offer a cap on closing adjustments to give purchasers a sense of financial certainty on final closing.

John Moher is a Solicitor with Fine and Deo Condominium Law Specialists in Vaughan Ontario. John can be reached at 905 760 1800

David Pylyp

Etobicoke Real Estate Agent

Accredited Senior Agent for York Peel and Halton Regions

Lives in Toronto and promotes Giving Value

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Comment balloon 3 commentsDavid Pylyp • December 18 2009 04:25AM


It is a good idea to hire an attorney and negotiate before signing the contract.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) over 10 years ago



You point out an extremely important issue. All these adjustments are simple gouging. How would anyone react to that in a resale situation?




Posted by Brian Madigan, LL.B., Broker (RE/MAX West Realty Inc., Brokerage (Toronto)) over 10 years ago

We are all amazed at the policies passed by City Council in Toronto Here is yet another blogging topic that has my interest Would you pay the extra Metro Pass Fee? http://www.finedeo.com/blog/main/Mandatory_Metropasses_for_New_Toronto_Condominiums  Living in Toronto David Pylyp

Posted by David Pylyp (RE/MAX Realty Specialists Inc.,) over 10 years ago

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