Free Settlement Statement Templates

Here are free Legal Settlement Statement Templates in MS Word format to help you do legal settlements smoothly. If you like these templates, you can also check out our collection of Scope of Work Statements and Statements of Intent.

When the transaction of a real estate property takes place, a document is sent to both the seller and buyer of the property. This document includes the overall expenses of the transaction, along with the tax deductions. This document is also known as the settlement statement and it is sent to both parties 1-2 days before the final deal.

What goes in a Settlement Statement?

Seller’s Deductions:

This part of the settlement statement is for the seller of the real estate property. Usually, there is only one form that is used for this purpose, but it has several parts on it. Each part is for a particular person, i.e. seller, buyer, etc. In a standard HUD-1 form, the first part is for the seller of the real estate property. For example, if a person is selling his house, he will receive his settlement statement one day before the final procedure of the transaction of the property and with this document, he can see how many and what type of expenses he will need to make to sell his house. Usually, tax deductions are also included in the settlement statement form.

Buyer’s Deduction:

Other than the seller of a real estate property, there is the buyer, who is the most important person in the transaction. Along with the seller, the buyer also receives a HUD-1 form, which is a settlement statement. It includes all the expenses that he is required to make to finalize the transfer of the property. It includes the amount of the property, the fee for transferring the property through the legal department, a commission of the broker, and tax deductions for federal purposes. With the settlement statement, the buyer can see how much the purchasing of the property will cost him, along with the tax that he is required to pay to the federal and local government.

Commission of the Broker:

Most of the time, the commission of the broker or the middleman in the transaction of the property is included in between the other figures on the settlement statements that are sent to both the buyer and the seller but sometimes, to make the process simpler and easier, brokers add their commissions and tax deductions separately on the settlement statement forms so that both the parties understand how much each of them will pay to the broker in form of the commission and for providing his services as the middleman.

Tax Deduction:

Usually, the tax deductions for both the seller and buyer are included with each type of expense, but sometimes the gross tax deduction is added separately in the settlement statement form. This is a step to make it easy for the seller and the buyer to understand the expenses and costs of the procedure and to make sure that they know how much tax they need to pay to the federal and local government after this transaction. The seller will pay the tax on the amount he receives in exchange for the property and the buyer will pay the tax on the property that he has just acquired.