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Beware “Subject to Adjustments”

Posted April 27th, 2010 under pitfalls, smart buying, smart selling.

The term “subject to adjustments” in an Agreement of Purchase and Sale is often given little attention by both buyers and sellers. However, if you are depending on the sale price to be accurate to the last penny, it can cause serious difficulty.

The purchase price of a home could end up as much as a couple thousand dollars more if the seller had prepaid their taxes. Similarly, a seller could lose some of the purchase price if their taxes are not up to date. There may be rental contracts that need to be bought out, maintenance fees, or a mortgage loan “interest adjustment”, all of which can cause a shortfall. (This last adjustment often happens when the closing date is not at the end of the month.)

Ask your agent to help you calculate these adjustments to avoid any nasty surprises!

Want to know more about adjustments? Just ask me, I'll be happy to help.