Upon the title being closed the seller's rights cease and the purchaser at once becomes entitled to every interest in the property. It is not practicable for the seller to settle and pay all his accounts respecting the property; it is much more convenient to adjust between seller and buyer such items as rents, insurance premiums and mortgage interest. The contract usually provides for an adjustment of those items and may include others. Customarily the adjustment is made as of the date of closing title, but the contract may set another date.

The adjustments are made in the form of a debit and credit account; the credit column containing all the items for which the seller is entitled to credit, and the debit column all items for which the purchaser is entitled to credit. For an illustration: 'suppose the property Were being sold for $20,000; $1,000 paid on signing contract; $4,000 to be paid on closing; the purchaser to take title subject to an existing mortgage of $10,000 with interest at 5 per cent per annum, payable semiannually, the last interest having come due and been paid two months before the closing of title; the balance of the price, to be paid by a bond and purchase money mortgage for $5,000. The property is rented to a tenant who pays $200 per month rent in advance, and whose rent was due and paid on the first of the month in which title is closed on the 15th. There is a fire insurance policy upon the property for three years; premium $36 which was issued 14 months prior to the closing of title.

In this illustration the first credit is the total selling price: $20,000. The next credit is for unexpired insurance. The policy was paid for in advance by the seller and has, at the time of closing 22 months still to run. If the seller cancelled the policy, he would receive a refund from the insurance company of less than the unexpired value, computed on a prorate basis. Hence the contract provision for an adjustment of this item. The premium being at the rate of $1 per month entitles the seller to a credit of $22 for the unexpired term of the policy. Another credit to which the seller is sometimes entitled arises in case of a postponement of the closing at the purchasers request. In such events the postponement is often conditioned upon the purchaser paying interest on the purchase price from the original date set for closing; the amount of interest would then be placed in the column of seller's credits.

The purchaser's first credit is the amount paid on signing of the contract: $1,000. Next he receives credit for the amount of the existing mortgage: $10,000. Two months' interest on the mortgage has accrued up to the date of closing and since the interest is payable semi-annually there will be a full six months of interest due four months after closing, which the purchaser, being then the owner, will have to pay. So he deducts the seller's share of the interest from the purchase price by crediting himself with one-third of the sum of $250 the interest for six months: $83.33. The bond and purchase money mortgage for $5,000 being given for part of the price entitles the purchaser to a credit for that amount. The final credit he receives has to do with the rent. The tenant has paid the seller $200, rent for the month. Title being closed in the middle of the month, the seller should turn over to the purchaser one-half of this amount. This is accomplished by the purchaser taking a credit for $100.

The adjustments as finally computed would appear as follows:

The purchaser therefore after the adjustments are made owes and must pay to complete the transaction, the sum of $3,838.67. It is probable that the contract in the illustrated case provided that the purchaser should pay for drawing the bond and purchase money mortgage, the recording fee, recording tax (if any) and for revenue stamps on the bond. The purchaser will be required to pay an additional sum to cover these items. Should there be any taxes a lien upon the property, the purchaser, since he desires to be certain they are paid, will usually deduct their amount from the balance he owes, and pay them himself. In the same way the purchaser would deduct an amount sufficient to cover any mortgage or judgment which is to be satisfied.

It is customary to compute time upon a basis of a 360 day year and 30 day month, unless a considerable sum is involved, in which case often the exact number of days is used. In counting the number of days in a certain period, the first day is excluded and the last day added. For example, To figure interest for a period of days, the amount due for one month is divided by 30 and multiplied by the number of days. The period from February 1st to March 15th would be figured as 1 month and 14 days. Interest unless otherwise specified is figured at the maximum legal rate.

It is usual to incorporate the statement of adjustments into a "Statement of closing of title." (Appendix form 66.)

This contains, in addition to the memorandum of adjustments, a notation of the date of closing, and place, the names of those present and the details of all instruments delivered. It is valuable for future reference in event of dispute. When the title is examined by a title company, and closed by its representative, he usually prepares the closing statement.