What Is a Settlement Sheet?

In the United States, when a buyer purchases a property, the transaction is finalized at a real estate closing. In most cases, there are a number of documents that must be presented, reviewed, and signed at the closing in order to make the transaction legal and final. One of the documents required at all closings is the settlement sheet, often referred to as the HUD-1 or the closing statement. Information contained in the settlement sheet is intended to inform the seller and buyer of all costs associated with the transaction, as well as give the seller a net proceeds amount and the buyer a net amount due at the closing.

The United States federal government frequently enacts laws or regulations designed to protect consumers from fraudulent transactions or simply to make sure that consumers are well-informed when entering into certain financial transactions. The United States Department of Housing and Urban Development (HUD) is one agency that oversees many of the transactions that involve real estate and property. HUD requires that all real estate closings include a settlement sheet that is provided to the buyer and seller before the closing for review.

Information contained on the settlement sheet that pertains to the buyer usually includes the purchase price of the property, the amount of the mortgage along with any points and the interest rate, the amount being deposited into escrow for taxes and insurance, and any other costs that are the responsibility of the buyer at closing. The seller's information typically includes the purchase price, the amount of any outstanding mortgages or liens on the property, costs that are the responsibility of the seller at closing, and a net proceeds amount that the seller will receive at closing. All of the aforementioned information should be clearly identified on the settlement sheet.

All closing documents, including the settlement sheet, are prepared by a closing agent. The closing agent is a person who is a neutral party to the transaction, meaning that he or she does not work for either the buyer or seller. Often, a title company acts as the closing agent for a real estate closing. The closing agent will typically request all paperwork related to the closing ahead of time, such as the contract and mortgage documents, in order to prepare the necessary legal documents required to close the sale. After review of the settlement sheet by either the buyer or the seller, if there are any errors or is information appears to be missing, he or she should require an amended settlement sheet before proceeding with the closing.