The closing date is when ownership of the property officially transfers from the seller to the buyer, marking the culmination of weeks or months of viewing properties, negotiations, and paperwork.
It’s an exciting time for both the buyer and seller, and one of the final documents is the real estate closing statement. The closing statement is prepared by a lawyer or notary when there is a transfer of real property. A little further in this post is an example of a closing statement for a home purchase.
This document outlines all of the financial details of a real estate transaction. The closing statement gives the buyer and seller a detailed breakdown of the costs and credits associated with the purchase and sale of a property.
It includes the property address, purchase price, mortgage loan amount, prorated property taxes, lawyer fees, and other expenses when transferring ownership of real property. It will also include the total amount owed by the buyer and received by the seller. At closing, all parties involved in the sale will review and sign the closing statement.
It’s prepared by the lawyer or notary who is responsible for the conveyancing and closing paperwork of the transaction.
The closing statement is helpful for a variety of reasons, such as the following:
Transparency: The statement offers transparency to both the buyer and the seller because it clearly shows all the financial aspects of the transaction so that all parties are aware of their financial obligations and entitlements.
Verification: It allows all parties to the transaction, including real estate agents, lawyers or notaries, to verify that the transaction aligns with the terms of the purchase agreement. It also helps all parties verify the agreed-upon terms, costs and credits.
Records: The closing statement serves as a record-keeping document for tax purposes because it provides a detailed account of the financial aspects of the transaction, which is very helpful to buyers and sellers when it’s time to file those taxes!
Legal requirement: A closing statement is a legal requirement for the completion of a real estate transaction to ensure that the transaction complies with all laws and regulations.
NOTE: The following transaction is for illustrative purposes and doesn’t reflect actual market value or a specific transaction. This statement has been simplified.
Summary of Transaction:
Property Address: 1234 Main Street
Purchase price: $309,900
Gross GST charged on price: $15,495
Property Transfer Tax: $4,180
Deposit paid to seller: $45,0000
Mortgage proceeds from the bank:
Title fee: ($309.00)
Wire fee: ($15.00)
Net Mortgage Proceeds: $255,529.44
Buyer’s portion of property taxes to be paid by Seller when due: $795.40 x 299 / 365 days = $651.57
Lawyer Fees: $1,000
In conclusion, the real estate closing statement is a very important document in the purchase and sale of real property. The closing statement is beneficial for both the buyer and the seller and is prepared by your lawyer and notary during the conveyancing proces.
*Disclaimer: The topics of discussion, content and resources on this website are general information that may not be the right solution or advice for you specifically. Not intended to solicit buyers or sellers currently under contract with a brokerage.
*Stock images from Social Squares
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