What is a Settlement Statement?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 11 August 2019
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A settlement statement is a document that provides a detailed breakdown of all the costs that are involved in the successful completion of a transaction. In the United States and a number of other countries, the term most commonly refers to a statement that documents all the costs associated with the sale of a piece of real estate. The idea is to provide both the buyer and the seller with a clear understanding of what type of expenses are incurred during the course of the transaction, and make sure there is no confusion as to which party is responsible for each of the costs. Typically, access to the settlement statement is granted no later than one full business day prior to the final settlement of the transaction.

In the United States, a specific format for the settlement statement is provided by the federal Department of Housing and Urban Development, or HUD. The document is known as the HUD-1, and helps to keep the information organized in a uniform manner, as well as making sure that no essential detail is overlooked in the preparation of the statement. Along with listing specific expenses, the form also requires that information regarding the purchase price, and the mortgage that the buyer is using to acquire the property is included.


The preparation of a settlement statement may be handled by the lender who is providing the financing for the property purchase, or by a broker or a financial professional who oversees the escrow process. It is not unusual for the realtor arranging the purchase to make sure that the form is accurate and is filed with the proper agency. In situations where individuals are selling real estate without the benefit of a realtor, the local offices of property and revenue agencies can provide assistance with securing the proper form and filling out the form with the correct data.

Many jurisdictions require some type of settlement statement as a means to protect the interests of both the buyer and the seller. The form helps to eliminate the possibility of the inclusion of fees that are questionable, illegal, or not relevant to the transaction. At the same time, the filing and review of this type of form also minimizes the chances for any type of kickbacks to be buried in the overall costs of the transaction. By creating a means for full disclosure to take place, there is a considerably smaller chance for there to be any miscommunication between the buyer and seller regarding what information was and was not shared during the negotiation stage.


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