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closing statement real estate example

Introduction

In the context of real estate transactions in Kenya, a closing statement is a crucial document that outlines the final terms and conditions of the sale, including the financial details and the transfer of ownership. This document is typically prepared by the advocate representing the buyer or the seller and is signed by both parties to signify their agreement to the terms. The closing statement ensures that all legal and financial obligations are met before the property changes hands.

Table of Contents

  1. Legal Framework

    • 1.1 The Constitution of Kenya

    • 1.2 The Land Act, 2012

    • 1.3 The Land Registration Act, 2012

    • 1.4 The Law Society of Kenya (LSK) Conditions of Sale

  2. Components of a Closing Statement

    • 2.1 Identification of Parties

    • 2.2 Property Description

    • 2.3 Purchase Price and Payment Terms

    • 2.4 Adjustments and Prorations

    • 2.5 Representations and Warranties

    • 2.6 Closing Costs

    • 2.7 Transfer of Ownership

    • 2.8 Signatures and Date

  3. Sample Closing Statement

    • 3.1 Identification of Parties

    • 3.2 Property Description

    • 3.3 Purchase Price and Payment Terms

    • 3.4 Adjustments and Prorations

    • 3.5 Representations and Warranties

    • 3.6 Closing Costs

    • 3.7 Transfer of Ownership

    • 3.8 Signatures and Date

  4. Conclusion

1. Legal Framework

1.1 The Constitution of Kenya
  • Article 40: Provides for the protection of the right to property, ensuring that every person has the right to acquire and own property.

1.2 The Land Act, 2012
  • Section 38: Outlines the procedures for the transfer of land, including the requirement for a written agreement.

  • Section 44: Details the obligations of the seller and the buyer in a land transaction.

1.3 The Land Registration Act, 2012
  • Section 24: Provides for the registration of land and the issuance of title deeds.

  • Section 26: Establishes the conclusive evidence of ownership provided by a title deed.

1.4 The Law Society of Kenya (LSK) Conditions of Sale
  • These conditions provide a standardized framework for real estate transactions, ensuring that both parties are aware of their rights and obligations.

2. Components of a Closing Statement

2.1 Identification of Parties
  • Buyer: Name, address, and identification details.

  • Seller: Name, address, and identification details.

2.2 Property Description
  • Detailed description of the property, including the title number, location, and any relevant features.

2.3 Purchase Price and Payment Terms
  • The agreed purchase price.

  • Payment terms, including any deposits made and the balance due at closing.

2.4 Adjustments and Prorations
  • Adjustments for property taxes, utilities, and any other prorated expenses.

2.5 Representations and Warranties
  • Statements by the seller regarding the condition of the property and any encumbrances.

2.6 Closing Costs
  • Breakdown of all closing costs, including legal fees, stamp duty, and registration fees.

2.7 Transfer of Ownership
  • Details of the transfer process, including the handover of keys and the registration of the title deed.

2.8 Signatures and Date
  • Signatures of both parties and the date of the agreement.

3. Sample Closing Statement

3.1 Identification of Parties
  • Buyer: John Doe, P.O. Box 12345, Nairobi, ID No. 12345678.

  • Seller: Jane Smith, P.O. Box 67890, Mombasa, ID No. 87654321.

3.2 Property Description
  • Title Number: Nairobi/Block 123/456.

  • Location: Karen, Nairobi.

  • Description: A four-bedroom house with a detached servant's quarter.

3.3 Purchase Price and Payment Terms
  • Purchase Price: KES 20,000,000.

  • Deposit: KES 2,000,000 (paid on 1st January 2023).

  • Balance: KES 18,000,000 (due on closing date).

3.4 Adjustments and Prorations
  • Property Taxes: KES 50,000 (prorated to the closing date).

  • Utilities: KES 10,000 (prorated to the closing date).

3.5 Representations and Warranties
  • The seller represents that the property is free from any encumbrances and that all taxes and utilities are paid up to the closing date.

3.6 Closing Costs
  • Legal Fees: KES 100,000.

  • Stamp Duty: KES 400,000.

  • Registration Fees: KES 20,000.

3.7 Transfer of Ownership
  • The seller agrees to hand over the keys and all relevant documents upon receipt of the balance of the purchase price.

  • The buyer agrees to register the title deed in their name within 30 days of the closing date.

3.8 Signatures and Date
  • Buyer: ___________________________ Date: _______________

  • Seller: ___________________________ Date: _______________

Conclusion

A closing statement is an essential document in real estate transactions in Kenya, ensuring that all legal and financial obligations are met before the transfer of ownership. By adhering to the legal framework provided by the Constitution of Kenya, the Land Act, 2012, the Land Registration Act, 2012, and the LSK Conditions of Sale, both parties can ensure a smooth and legally compliant transaction. The sample closing statement provided above serves as a guide to the key components that should be included in such a document.

Answered by mwakili.com