We recently shared a blog concerning the buyer’s ALTA Settlement Statement, and everything that disclosure document entails. Today, we would like to talk about what it looks like from the seller’s perspective.
As the seller, the format of the American Land Title Association (ALTA) Settlement Statement is essentially the same as the buyer. It was created by ALTA in compliance with the Consumer Financial Protection Bureau’s (CFPB) TILA RESPA (TRID) Integrated Disclosure rule. (Your copy from us will look different only in the fact that we have personalized it for our company’s use.)
At first glance, you will see all the logistics of the transaction. Then, you will find the two columns that count…a debit and a credit column. The debit column is money you will be paying out, and the credit column is money coming in or a fee that has already been paid.
So…let’s get to the numbers. (You can click on the ALTA link above to follow along.)
- The first credit you will see is the sales price. It’s money coming to you from the buyer, and it’s a big plus.
- Next, the prorations could be a debit or a credit, depending on whether you have or have not paid a bill…like property taxes. Let’s say you paid your property taxes, which in Northern Virginia are due in July for the first half of a calendar year and December for the second half. On December 5, 2021, you made a payment that covers the remainder of the property taxes for 2021. If closing took place on December 14, 2021, you willI be reimbursed by the buyer for the remainder of the year, and you will see that in the credit column. However, if closing takes place in January, those property taxes aren’t due until July. So, if you close on January 13, 2022, you will need to pay the buyer for the days prior to closing in January. That would be in the debit column on your settlement statement. If the property is in a Homeowner’s Association (HOA) or Condominium Owners Association (COA), we will prorate the dues between you and the buyer. The HOA or COA does not reimburse you for dues that have already been paid.
- The next section is the payoff for your mortgage. You may have one or more mortgages, in addition to an equity/credit line. The credit line is attached to your home and will need to be paid off at closing, as well. Consider the following:
- You may be wondering if you should make your monthly mortgage payment or pay your HOA dues knowing that closing is right around the corner. Typically, if you are closing within the first 10 days of the month, you don’t need to make those payments; we will have them factored into your settlement statement payoff. After the 10th of the month, you should make your payments because on the fifteenth, the bank could charge a late fee. If you have any questions about making the payment, reach out to the processor assigned to your closing.
- Also, most sellers only look at their principal balance when it comes to paying off their loan. If you are closing later in December, you may assume you will get money back because you made December’s payment, but payments are made in arrears. When you make your December 1st payment, you are actually paying November’s interest so you would still owe for the days you owned the home in December. Your payoff would include your principal balance and the interest for the December days. We will typically add in 7-10 days of interest because if we send the payoff to the bank and it’s short, the bank will keep charging you interest on the loan until it is paid in full. We will have a copy of the payoff statement and go through how we came up with the amount due so you know exactly what you are paying for.
- Commission comes next…whatever was agreed upon for the buyer’s agent AND yours. It is customary that the seller pays commissions for both parties.
- Title company fees include all of our fees including deed preparation. In Virginia, deeds need to be prepared by attorneys. At Highland Title + Escrow, we have our law firm, in addition to the title company, but on your settlement statement, you will see all of our fees separated accordingly.
- Recording charges are a percentage of the sales price and could vary according to location in the state of Virginia.
- The remaining fees will cover any additional settlement charges. If the HOA charges a transfer fee or you are paying for a termite inspection, you would see it here.
Now it’s time to total the debits and credits, do the math, and hopefully, you will be getting some money back. If you would like an estimate, take a look at our “Get a Quote” option on our website.