Settlement Statement
Definition and meaning of Settlement Statement in real estate.
A settlement statement is a comprehensive financial document that details all the receipts, disbursements, credits, and debits involved in a real estate transaction. It outlines the exact amounts of money paid or received by both the buyer and the seller.
In more detail
Historically known as the HUD-one form in many transactions, modern residential mortgages in the United States typically use the Closing Disclosure as the primary settlement statement. The document accounts for every dollar, including the purchase price, loan amount, escrow deposits, prorated property taxes, title insurance, and broker commissions.
Both the buyer and the seller receive their respective versions of this statement, which must balance perfectly to show that all funds are accounted for. Real estate agents and title officers review this document carefully before closing to catch any mathematical errors or terms that do not match the purchase contract. Borrowers should retain this statement for their tax records, as some closing costs may be tax-deductible.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Also known as | Closing Disclosure, HUD-one form, or settlement sheet |
| Required by | Federal lending regulations for consumer mortgages |
| Tax Importance | Documents deductible expenses and defines the tax basis of the property |
A home seller reviews their settlement statement at the closing table to verify that their mortgage balance has been paid off and to see the final net proceeds of the sale.
Frequently asked questions
When do you receive the settlement statement?
Lenders are legally required to provide buyers with the Closing Disclosure at least three business days before the closing meeting.
Who prepares the settlement statement?
The settlement statement is typically prepared by the closing attorney, title company officer, or escrow agent in coordination with the lender.