Closing statements

A closing statement has a column for each party. A debit is money that party owes at closing. A credit is money that party already paid or is owed.

Two-party items

These appear on both sides, in equal amounts, as a debit to one party and a credit to the other.

• Purchase price: debit buyer, credit seller.
• Prorations: see the prorations lesson.
• Assumed loan: credit buyer, debit seller.
• Security deposits the seller is holding: credit buyer, debit seller. They belong to the tenants, so they pass to the new owner.

One-party items

These appear for only one party.

• Buyer: earnest money deposit and new loan (credits); loan costs, note stamps, intangible tax (debits).
• Seller: payoff of the seller's loan, commission, deed stamps (debits).

Bottom lines

Buyer's cash to close = buyer's debits − buyer's credits

Seller's net proceeds = seller's credits − seller's debits

When you work a statement by hand, list every item with its column before adding. Most wrong answers come from putting a proration or the deposit in the wrong column, not from arithmetic.