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Closing Statement Real Estate Example

A closing statement, also known as a settlement statement, is a document that provides a detailed breakdown of the financial transactions involved in the transfer of real property. It outlines the costs, credits, and fees associated with the sale or purchase of a property.

Introduction
Purpose of a Closing Statement
Components of a Closing Statement
Example of a Closing Statement
Conclusion
TLDR

Introduction

The closing statement is a crucial document in any real estate transaction. It ensures that all parties involved are aware of the financial obligations and responsibilities associated with the sale or purchase of the property. This document is typically prepared by the closing agent, who is usually a lawyer or a title company.

Purpose of a Closing Statement

The primary purpose of a closing statement is to:

Summarize the financial aspects of the transaction: It provides a clear and concise overview of all the costs, credits, and fees involved in the transaction.
Ensure transparency and accountability: It helps to ensure that all parties are aware of the financial implications of the transaction and that there are no hidden costs or surprises.
Facilitate a smooth closing process: By providing a clear and accurate accounting of all financial aspects, the closing statement helps to streamline the closing process and avoid delays.

Components of a Closing Statement

A typical closing statement includes the following components:

Buyer's Costs: These include the purchase price, down payment, closing costs, and any other expenses incurred by the buyer.
Seller's Costs: These include the proceeds from the sale, any outstanding mortgage balances, closing costs, and any other expenses incurred by the seller.
Credits: These are amounts that are credited to either the buyer or the seller, such as the earnest money deposit, seller concessions, or any other credits that are agreed upon in the purchase agreement.
Debits: These are amounts that are debited to either the buyer or the seller, such as closing costs, taxes, and any other expenses that are incurred in connection with the transaction.

Example of a Closing Statement

Here is an example of a closing statement for a real estate transaction in Kenya:

Closing Statement

Transaction Date: [Date]

Property Address: [Property Address]

Buyer: [Buyer Full Name]

Seller: [Seller Full Name]

Closing Agent: [Closing Agent Name]

Buyer's Costs

Item	Amount (KES)
Purchase Price	[Purchase Price]
Down Payment	[Down Payment]
Closing Costs	[Closing Costs]
Total Buyer's Costs	[Total Buyer's Costs]

Seller's Costs

Item	Amount (KES)
Proceeds from Sale	[Proceeds from Sale]
Outstanding Mortgage Balance	[Outstanding Mortgage Balance]
Closing Costs	[Closing Costs]
Total Seller's Costs	[Total Seller's Costs]

Credits

Item	Amount (KES)
Earnest Money Deposit	[Earnest Money Deposit]
Seller Concessions	[Seller Concessions]
Total Credits	[Total Credits]

Debits

Item	Amount (KES)
Closing Costs	[Closing Costs]
Taxes	[Taxes]
Total Debits	[Total Debits]

Net Settlement

Item	Amount (KES)
Buyer's Costs	[Total Buyer's Costs]
Seller's Costs	[Total Seller's Costs]
Credits	[Total Credits]
Debits	[Total Debits]
Net Settlement	[Net Settlement]

Note: This is just a sample closing statement and the actual amounts may vary depending on the specific details of the transaction.

Conclusion

The closing statement is an essential document in any real estate transaction. It provides a clear and concise overview of the financial aspects of the transaction, ensuring transparency and accountability for all parties involved. By carefully reviewing the closing statement, buyers and sellers can ensure that they understand the financial implications of the transaction and that there are no hidden costs or surprises.

TLDR

A closing statement is a document that summarizes the financial aspects of a real estate transaction, outlining costs, credits, and fees for both the buyer and seller. It ensures transparency and accountability, facilitating a smooth closing process.

Sources

Case Laws

There are no specific case laws directly related to the format or content of a closing statement in Kenya. However, the following case laws are relevant to the general principles of real estate transactions and the importance of transparency and accountability:

Mombasa Municipal Council v. N. M. Shah & Sons Ltd. [1968] EA 443: This case established the principle that a contract for the sale of land must be in writing and signed by both parties. This principle is relevant to the closing statement as it ensures that all terms and conditions of the transaction are clearly documented.
Kenya Commercial Bank Ltd. v. Kiplagat [2003] 1 EA 1: This case emphasized the importance of good faith and fair dealing in real estate transactions. This principle is relevant to the closing statement as it ensures that all parties are treated fairly and that there are no hidden costs or surprises.
Kenya Commercial Bank Ltd. v. Mbugua [2005] 2 EA 1: This case highlighted the importance of proper documentation in real estate transactions. This principle is relevant to the closing statement as it ensures that all financial aspects of the transaction are accurately recorded and that there is a clear audit trail.

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