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Real Estate Closing Statement for a Real Estate Attorney

Introduction
Purpose of a Real Estate Closing Statement
Components of a Real Estate Closing Statement
- 3.1 Property Information
- 3.2 Financial Summary
- 3.3 Prorations and Adjustments
- 3.4 Loan Information
- 3.5 Fees and Charges
- 3.6 Disbursement of Funds
Sample Real Estate Closing Statement
Relevant Case Laws and Legal Precedents
Conclusion
TLDR

1. Introduction

A real estate closing statement, also known as a settlement statement, is a comprehensive document that outlines the financial details of a real estate transaction. It is a critical component in the process of transferring property ownership from the seller to the buyer. This document ensures transparency and clarity by itemizing all the costs, credits, and fees associated with the transaction.

2. Purpose of a Real Estate Closing Statement

The primary purpose of a real estate closing statement is to provide a detailed breakdown of the financial transactions involved in the sale or purchase of a property. It serves as a final accounting of all the costs and credits, ensuring that both parties are fully aware of their financial obligations and entitlements. This document is essential for:

Ensuring transparency in the transaction
Preventing disputes between the buyer and seller
Providing a clear record of the transaction for future reference

3. Components of a Real Estate Closing Statement

A real estate closing statement typically includes several key components:

3.1 Property Information

This section provides details about the property being transferred, including:

Property address
Legal description of the property
Names of the buyer and seller
Date of the closing

3.2 Financial Summary

The financial summary section provides an overview of the total costs and credits for both the buyer and the seller. It includes:

Purchase price of the property
Deposit or earnest money paid by the buyer
Adjustments for any pre-paid or unpaid expenses

3.3 Prorations and Adjustments

This section details any prorations and adjustments for items such as:

Property taxes
Homeowner association fees
Utilities
Rent (if applicable)

3.4 Loan Information

If the buyer is obtaining a mortgage, this section will include details about the loan, such as:

Loan amount
Interest rate
Loan term
Monthly payment amount

3.5 Fees and Charges

This section itemizes all the fees and charges associated with the transaction, including:

Real estate agent commissions
Title insurance fees
Attorney fees
Recording fees
Inspection fees
Appraisal fees

3.6 Disbursement of Funds

The final section outlines how the funds will be disbursed, including:

Amount paid to the seller
Amount paid to the lender
Amount paid to third parties (e.g., real estate agents, attorneys)
Any remaining balance to be paid by the buyer or refunded to the buyer

4. Sample Real Estate Closing Statement

Real Estate Closing Statement

Property Information:

Property Address: [123 Main Street, Nairobi, Kenya]
Legal Description: [Lot 12, Block 3, Nairobi County]
Buyer: [John Doe]
Seller: [Jane Smith]
Closing Date: [July 30, 2024]

Financial Summary:

Purchase Price: KES 10,000,000
Deposit/Earnest Money: KES 1,000,000
Adjustments:
- Property Taxes (Prorated): KES 50,000
- Homeowner Association Fees (Prorated): KES 10,000

Prorations and Adjustments:

Property Taxes:
- Total Annual Property Taxes: KES 100,000
- Prorated Amount (Seller's Responsibility): KES 50,000
Homeowner Association Fees:
- Total Annual Fees: KES 20,000
- Prorated Amount (Seller's Responsibility): KES 10,000

Loan Information:

Loan Amount: KES 8,000,000
Interest Rate: 5%
Loan Term: 30 years
Monthly Payment: KES 42,965

Fees and Charges:

Real Estate Agent Commission: KES 500,000
Title Insurance Fee: KES 50,000
Attorney Fee: KES 100,000
Recording Fee: KES 5,000
Inspection Fee: KES 20,000
Appraisal Fee: KES 30,000

Disbursement of Funds:

Amount Paid to Seller: KES 9,000,000
Amount Paid to Lender: KES 8,000,000
Amount Paid to Real Estate Agent: KES 500,000
Amount Paid to Title Insurance Company: KES 50,000
Amount Paid to Attorney: KES 100,000
Amount Paid to Recorder's Office: KES 5,000
Amount Paid to Inspector: KES 20,000
Amount Paid to Appraiser: KES 30,000
Remaining Balance (Refund to Buyer): KES 295,000

5. Relevant Case Laws and Legal Precedents

Case Law 1: Mogaka & 3 others v Munene (Civil Appeal E012 of 2022) [2023] KEHC 18194 (KLR)

Parties: Mogaka & 3 others (Appellants) vs. Munene (Respondent)
Outcome: The court provided clarity on the responsibilities of parties in a real estate transaction, emphasizing the importance of transparency and accurate documentation in closing statements.
Relevance: This case underscores the necessity of a detailed and accurate closing statement to prevent disputes and ensure a smooth transaction.

Case Law 2: Civil Case 75 of 2019

Parties: Not specified
Outcome: The court highlighted the importance of adhering to the terms outlined in the closing statement and the legal consequences of failing to do so.
Relevance: This case illustrates the legal enforceability of the terms in a closing statement and the potential repercussions of non-compliance.

Case Law 3: Civil Appeal 57 of 2017

Parties: Not specified
Outcome: The court ruled on the necessity of clear and precise documentation in real estate transactions to avoid misunderstandings and legal disputes.
Relevance: This case reinforces the importance of a well-drafted closing statement in ensuring clarity and preventing litigation.

6. Conclusion

A real estate closing statement is a vital document in the process of transferring property ownership. It provides a detailed breakdown of all financial transactions involved, ensuring transparency and preventing disputes. By understanding the components and purpose of a closing statement, both buyers and sellers can navigate the real estate transaction process with confidence and clarity.

7. TLDR

A real estate closing statement is a detailed document outlining the financial transactions involved in a property sale, ensuring transparency and preventing disputes. It includes property information, financial summary, prorations, loan details, fees, and fund disbursement.

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