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Real Estate Closing Statement for a Real Estate Attorney


Table of Contents
  1. Introduction

  2. Purpose of a Real Estate Closing Statement

  3. 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

  4. Sample Real Estate Closing Statement

  5. Relevant Case Laws and Legal Precedents

  6. Conclusion

  7. 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.


Sources

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